Speculation in exchange markets is often thought of as conducive to wild fluctuations in exchange rates.In practice it appears that speculators

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In reality, speculators often help to stabilize exchange rates due to their actions in response to market signals and news. While there have been cases of destabilization in certain currencies, this is not the norm and overall speculation tends to have a stabilizing effect. Choice A is incorrect as it implies that speculators are the sole cause of destabilization in currencies, which is not necessarily true. Choice B is also incorrect as speculation can have an impact in fixed rate systems as well.

Speculation in Exchange Markets Is Often Thought of as Conducive