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What is Exchange Rate Volatility

International Trade Policies in the Era of Globalization
The volatility of exchange rates is the source of exchange rates risk and has certain implications on the volume of international trade. Higher risk emerges for risk-averse traders as the exchange rate volatility escalades which also diminishes foreign trade. This happens to be the reason why deal on exchange rate is closed at the moment of contract agreement, however, payment is not made until the delivery takes place. Unpredictability of the exchange rates increases uncertainty regarding expected level of profit deteriorating international trade.
Published in Chapter:
An Analysis of Risk Transfer and Trust Nexus in International Trade With Reference to Turkish Data
Aslı Taşbaşı (Işık University, Turkey), Pınar Yeşim Sarıca (Işık University, Turkey), and Ahmet Hakan Yüksel (Işık University, Turkey)
Copyright: © 2020 |Pages: 20
DOI: 10.4018/978-1-5225-9566-3.ch009
Abstract
International trade introduces a range of risks, which causes uncertainty over the timing of delivery and payment between exporters and importers. This chapter is a first attempt in dissecting Turkey's trade data in terms of risk allocation and trust between the parties involved. Breaking down Turkish export and import data for the years 2000 to 2018 according to methods of payment and use of currencies, the chapter first finds the risk is distributed unevenly between the exporter and the importer. Then findings are evaluated to open a new avenue of future research, constructed on the inquiry whether emerging economies like Turkey can establish trust in their trade with developed economies by using blockchain technology.
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