Ideally a competitive market, be it for goods and services or for financial services or foreign exchange, serves best the interest of an economy when all conditions for healthy competition are met. Perfect competition requires that no single or a limited group of sellers or buyers on the market is powerful enough to dictate prices.
In the domestic foreign exchange market we have observed a few powerful sellers of foreign currencies dictating the prices. They defy the rules of competition. It is true that from Adam Smith to Marshall and Pigou a hundred years later and still later, Joan Robinson and E.H. Chamberlain, economists underlined circumstances in which competitive laissezfaire would not produce maximum efficiency.