Why might economic sanctions lead to a decrease in FX trading activity on FGX?

Economic sanctions typically impose restrictions on trade and financial transactions between countries, affecting both the availability of goods and the flow of currencies. When sanctions are in place, specific goods may be prohibited from being traded, and financial institutions may be limited in their ability to conduct transactions with sanctioned entities or nations.

This leads to decreased currency flow, as businesses and traders cannot freely exchange currencies needed for international trade. Consequently, since foreign exchange trading relies heavily on the movement of currencies linked to actual trade, the barriers created by sanctions result in reduced trading activity in the foreign exchange market. Therefore, the correct answer highlights the direct impact of sanctions on the mechanics of trade and currency exchange, which in turn diminishes FX trading activity on platforms like the FGX.