While the stronger NBS interventions would successfully calm the markets, they would also delay market development by stifling genuine market making of private banks. Some of our evidence points out that the short-term exchange rate volatility increases gross trading volumes in the interbank market and thus strengthens the arbitraging behavior of market participants. Chart 2.
Short-term FX volatility and spot trading volumes in the interbank market Interbank market spot gross trading volume (rhs)  st. dev.