foreign currency bid-ask spread

Bank and other currency dealer positions are NOT considered to directly impact the size of foreign currency spreads. If a dealer wants to reduce his or her holdings, he or she will usually adjust the mid-point of the spread rather than the spread itself.

• To uload an excess inventory of the foreign currency:
• Reduce his or her foreign currency ask (selling price)
• Reduce his or her foreign currency bid (buying price) (*)
• The spread would remain relatively unchanged.

(*) So that he or she does not buy any additional foreign currency.