A Note on the Efficiency of Black Markets in Foreign Currencies.

There exists considerable literature on the efficiency of foreign exchange markets, with most of the empirical work supporting the hypothesis that the foreign exchange markets are weak form efficient. In some countries, however, trading in foreign currencies takes place in black markets which are the result of restrictions placed on the foreign sector. The importance of these markets in sustaining the illegal import and export of goods and assets, as well as illegal capital flows, has been growing in the past few years. In this paper, market efficiency tests are performed on the black market exchange rates in India, Taiwan, and South Korea. [ABSTRACT FROM AUTHOR]