Exchange-rate volatility

Volatility is a measure or description of variability, distinct from the rate’s quotation or the organisation’s financial exposure to it. The currency pair, return definition, observation frequency and estimation window matter. Historical variation does not guarantee the same future distribution, and sudden changes can exceed a model’s expectations. Greater quoted volatility can affect option values and planning, but the business’s exposure also depends on its actual transactions, assets, liabilities and competitive position. Do not infer a fixed forecast direction from volatility alone.