Economics Exchange Rates Questions
Exchange rate volatility refers to the degree of fluctuation or variability in the value of one currency relative to another currency over a certain period of time. It measures the rate at which exchange rates change and the extent to which they deviate from their average or expected values. Exchange rate volatility can be influenced by various factors such as economic indicators, political events, market speculation, and changes in supply and demand for currencies. High exchange rate volatility can create uncertainty and risks for businesses and investors engaged in international trade and investment, as it can affect the competitiveness of exports and imports, the profitability of foreign investments, and the stability of financial markets.