The Park Place Economist


The foreign exchange market is the largest and most liquid in the world and according to the Bank for International Settlements foreign exchange trading averages over five trillion dollars a day. The foreign exchange market is largely made up of institutional investors, corporations, governments, banks, as well as currency speculators. With the large size of the foreign exchange market one can see how an increase in uncertainty surrounding a specific exchange rate could have a huge effect on a nations overall economic function. The goal of this paper will be to measure the economic effects of volatility in the exchange rates in BRICS nations on international trade flows.