Skip to content

Currency volatility

Currency volatility is a general term describing often random and unpredictable moves in the currency exchange rates.  Greater currency volatility implies less stable and more unpredictable exchange rates between two currencies, expectations of greater volatility simply mean greater uncertainty about the exchange rates in the future.


Currency volatility combined with foreign currency exposures is what results in currency risks for a given entity. If a company has currency exposures from its day-to-day business or foreign assets or liability in currencies that have elevated volatility, it is likely that such a company would have high currency risks affecting its business. Such risks can be hedged using financial instruments with HedgeFlows.