SOURCE NIH: Amniotic fluid is a clear, slightly yellowish liquid that surrounds the unborn baby (fetus) during pregnancy. It is contained in the amniotic sac. The fetus floats in the amniotic fluid. During pregnancy the amniotic fluid increases in volume as the fetus grows. Amniotic fluid volume is greatest at approximately 34 weeks of gestation, when it averages 800 ml. Approximately 600 ml of amniotic fluid surrounds the baby at full term (40 weeks gestation). This fluid is constantly circulated by the baby swallowing and "inhaling" existing fluid and replacing it through "exhalation" and urination. Amniotic fluid accomplishes numerous functions for the fetus, including:
Protection from outside injury by cushioning sudden blows or movements
Allowing for freedom of fetal movement and permitting symmetrical musculoskeletal development
Maintaining a relatively constant temperature for the environment surrounding the fetus, thus protecting the fetus from heat loss
Permitting proper lung development
Indeed.