Why Are Forex Markets Volatlite

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Why Are Forex Markets Volatlite

Reasons for Current Forex Markets Volatile

The Forex markets have turned volatile in recent months and the primary reason is said to be Russia's invasion of Ukraine. A poll conducted by found investors are shifting their money away from riskier ones including the battered rouble, the native currency of Russia.

The volatility level now is even more than what was witnessed in the wake of the COVID-19 pandemic, states Deutsche Bank. The trend is believed to grow further in the near future. About 90 percent of the respondents in the poll said Forex volatility may increase significantly in the next three months.

Standard Chartered head for G10 FX strategy, Steve Englander, said the volatility could turn up higher as such issues have not been under discussion for a very long period or in a generation.

Russia invaded Ukraine on February 24 and the war is still in continuation for the third month in a row. Investors reciprocated by siphoning their money away from riskier assets including the Swiss franc, the Japanese yen and the USD.

It is believed the Swiss franc and the Japanese yen would witness an increased demand in the near term even though these were earlier expected to lose strength marginally.

Meanwhile, the performances of traditional safe havens are going as usual. These are not underperforming even under tensions.

Forex is an abbreviation of foreign exchange and it is a marketplace for the trading of currencies. It is the largest financial market in the world with a daily turnover of more than $6 trillion. It is open 24 hours a day from Monday to Friday. It is primarily affected by social, economical and political events. It is highly volatile and simultaneously highly liquid.

Russia has destroyed several towns and cities in Ukraine and this has led to the displacement of millions of Ukrainians who have taken refuge in the neighboring countries.

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