The foreign exchange market Snoozefest can not last

It is quiet in foreign exchange markets. Maybe too quiet.

All actions have been on stocks this year, as any boring currency trader will tell you. The market is usually a hub for fierce retail, but has largely been quiet during the meme-stock phenomenon.

The risk of an increase in exchange rate volatility is something worth considering for investors with exposure abroad as well as for corporate treasurers.

Equities are usually more volatile than currencies. But the gap between the Cboe Volatility Index – the well-known VIX “fears” it measures volatility of S&P 500 options – and the Cboe EuroCurrency Volatility Index, which does the same for euro-dollar options, is large by recent history standards. The same applies to volatility in other currency pairs.

The trend is relatively new. For most of the last decade, stock market volatility and exchange rates have been lower and lower in tandem with occasional increases. But after markets began to recover from last year’s pandemic-induced sell-off, the situation was disrupted: Exchange rate volatility resumed its decline, but stock market volatility settled on a higher plateau.

Spread the love
[ Sharing is Caring! ]

More Tags We Love

travel insurance uk covid auto insurance companies travel insurance covid vaccine is private insurance tax deductible auto insurance best rates review major auto insurance companies in florida how to report someone driving without car insurance which is the best health insurance company in india car insurance for seniors over 60 healthcare insurance companies in canada

This div height required for enabling the sticky sidebar