economic fundamentals—both observed and unobserved—affect the long-term volatility of offshore exchange rates. First, trade … openness attenuates the long-term volatility, while financial openness has no effect on volatility. Specifically, the use of … bilateral currency swap agreements and the relaxation of capital control are associated with lower volatility, while stock …

rate puzzles. One such puzzle is the fact that nominal exchange rates are enormously volatile, but that this volatility … parity prediction. The gravity prediction matches the volatility of actual inflation, and tracks its path closely. The … of bilateral trade is negatively correlated with bilateral exchange rate volatility …

that although "commodity" and "industrial" EME are heterogeneous, REER volatility tends to be higher among the former. Yet …, REER volatility between emerging and advanced countries does not differ very much, apart from a few EME countries …