Currency speculation can lead to market inefficiencies from "summary" of International Money and Finance by Michael Melvin
Currency speculation can, in fact, lead to market inefficiencies. When individuals or institutions engage in speculative activities in the foreign exchange market, it can result in distorted price signals and misallocation of resources. Speculators often make decisions based on short-term gains rather than long-term fundamentals, which can create excessive volatility and disrupt the efficient functioning of the market. Moreover, currency speculation can amplify market movements and lead to sharp fluctuations in exchange rates. This can increase uncertainty and risk for businesses, making it difficult for them to plan and make informed decisions. As a result, market participants may become more hesitant to engage in international trade and investment...
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