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Why do some currencies swing wildly while others stay stable? Learn what causes currency volatility and which currencies are most affected.
Currency volatility measures how much an exchange rate moves over a given period. High volatility means the rate swings widely β by several percent in a day. Low volatility means rates are relatively stable. Volatility is driven by economic data, political events, and market sentiment.
Major currencies (USD, EUR, GBP, JPY, CHF) are relatively stable because they are backed by large, liquid economies. Emerging market currencies (Turkish Lira, Argentine Peso, Egyptian Pound, Nigerian Naira) are more volatile because of higher inflation, political instability, and smaller forex markets.
Surprise central bank decisions, unexpected election results, geopolitical conflicts, and large economic data misses all cause volatility spikes. Flash crashes can also occur in thin markets β for example, the Japanese Yen flash crash in January 2019 saw the Yen strengthen 4% against the Dollar in minutes.
If you need to exchange a large sum and are worried about rate movements, consider splitting the exchange into multiple smaller transactions over several weeks. Businesses can use forward contracts to lock in a rate for a future payment date, eliminating uncertainty.
Use our live converter with real-time rates and historical charts.