Currency volatility describes how much and how frequently exchange rates move over time. Some currencies tend to fluctuate more than others, and the degree of volatility can change depending on market conditions. 

What currency volatility means for businesses 

When exchange rates change frequently or by large amounts over short periods of time, the final value of transactions can be harder to anticipate. For businesses with significant exposure, higher currency volatility increases uncertainty around revenues, costs and cash flow.  

To combat this uncertainty, business will often use an FX risk management strategy, which can be devised during an FX audit.