A long empirical literature has examined the idea that, in the absence of hedging mechanisms, currency risk should have …, and the current consensus seems to be that there is at most a weak negative effect of exchange rate volatility on … aggregate trade flows. However, most of this literature examines the impact of exchange rate volatility on aggregate trade flows …

-variance expected utility, we find that a rise in exchange rate volatility can reduce both supply and demand for commodities and … rate can affect domestic trading and prices through offshore hedging and international trade if the traders are interested … their volatility can be transmitted to the domestic market as well as the dynamic relationship between intermediate and …