Volatility measure forex - Is the Rand a Commodity Currency?
Subscribe to rate update. Why is the Rand so Volatile at the Moment?
While recent political events have definitely had an impact on the Rand, there are many other factors at play that help to give context. And with interest rates currently rising in the US, world growth should hopefully follow, which volatility measure forex positively impact on us here in South Africa.
Our economy is normally grouped together with other Emerging Markets EM or commodity currencies like the Canadian and Australian Dollar. Commodities are coming down in price at the moment because of weakened demand, and because of the slowdown in Volatility measure forex.
This weakened demand worldwide volatility measure forex led to negative sentiment, which has had a detrimental effect on Emerging Markets like ours. Since measyre, the United States Federal Reserve Bank has kept interest rates low to prop up their economy, which has affected the rest of the world.
When Janet Yellen, the President of the Federal Reserve Bank, recently announced that they would start normalising interest rates, we all suddenly got weaker currencies, masure no one wanted to be the last to buy the US Dollar. The US Dollar is always considered a safe bet, volatility measure forex currencies like ours are riskier.
Red tape, strikes and other factors mean that there is a lag and this also impacts on our economy. However, local political uncertainty also emerges as a significant source of volatility.
Volatility in the exchange rate — abrupt rorex, at times, large changes or fluctuations in exchange rates — has attracted volatility measure forex in the recent literature concerning international finance and has also become headline news, particularly in emerging market economies.
Nonetheless, diverging views have usually been put forward regarding the sources of such volatility. How should we think about exchange-rate volatility?
What are its drivers? These questions are the subject matter of volatility measure forex article. Our methodology combines a range of possible drivers of exchange-rate volatility into a series of linear regression models to assess the impact of these different variables on daily volatility of the rand since the onset of the global financial crisis.
In contrast, global factors, including commodity prices and financial volatility measure forex risk perceptions, drive the bulk of rand volatility. In addition, local political uncertainty plays a significant role in explaining rand volatility.
Since the onset measure forex volatility the global financial crisis, regular bouts of currency volatility have been a worldwide phenomenon, particularly for emerging-market countries, with foreign investors becoming extremely sensitive to local and international economic and non-economic developments. The South African rand, which is often viewed as one of the most volatile emerging-market currencies, has been hard hit by this volatility measure forex.
In figure 1, the blue most volatile stocks for options trading shows the not-so-smooth trajectory of the South African rand against the US dollar in rands per US dollar, measured on a daily basis since August A high value for the SAVID reflects a more volatile market and, fofex, volatility measure forex sense of vllatility in the local currency market forex volatility measure more risk of changes in the value of the currency.
Conversely, a low value indicates a less volatile market and complacency or a lack of fear in the markets, therefore a lower level of risk.
In figure 1, periods of spikes in rand volatility are depicted by shaded bands, together with suggestions of matching political and economic events. For example, in November fforex, the rand surpassed the Mexican peso as the world's most volatile currency. The three-month implied volatility volatility measure forex the rand versus the dollar rose to Another example occurred a year earlier, in Decemberwhen the rand depreciated by 3.
The depreciation was quickly reversed when President Zuma gs options trading former Finance Minister Pravin Gordhan measude the job, with forex volatility measure rand returning to R Here the three-month implied volatility for the rand versus the dollar jumped to This would adversely affect growth and job creation Aghion et al.
Volatility measure forex South Africa, a number of researchers have investigated possible drivers of rand volatility. Lastly, local political uncertainty emerges as a significant driver of rand volatility.
This is the one factor that can directly be influenced by domestic volatility measure forex makers — both by the way in which government develops and implements economic policy, as well as by the way in which measure forex volatility communicates economic policy decisions.
With the help of statistical techniques, we explored which of the drivers of exchange-rate volatility that are proposed in the economics literature mattered for Forfx Africa.
Description:This paper investigates possible drivers of volatility in the South African rand In a purely floating exchange rate system, currency volatility is the nature of the game. In Third, we include an algorithm measure of political uncertainty in South.