What is ‘Dayrate Volatility’
The intraday unpredictability of an exchange rate (or price of a good or service), that changes due to imbalances in supply and demand. Price levels of various goods or services can change very quickly, depending on the current market condition.
Explaining ‘Dayrate Volatility’
Low levels of dayrate volatility illustrate that the market is complacent, and the existing price is not a major concern for the transacting parties. On the other hand, a rise in dayrate volatility can be used to signal fear or a lack of supply. This degree of volatility generally results in large price fluctuations, which suggests that the market is in a state of panic because there may be a larger group of sellers than there are buyers.
Further Reading
- Testing continuous-time models of the spot interest rate – academic.oup.com [PDF]
- Federal reserve transparency and financial market forecasts of short-term interest rates – papers.ssrn.com [PDF]
- Interest rate smoothness and the nonsettling-day behavior of banks – www.sciencedirect.com [PDF]
- Economic growth and investment in the Arab world – repositori.upf.edu [PDF]
- Structural breakpoints in volatility in international markets – papers.ssrn.com [PDF]
- Assessing China's exchange rate regime – academic.oup.com [PDF]
- The effect of uncertainty on investment: Evidence from Texas oil drilling – www.aeaweb.org [PDF]
- Using interest rate uncertainty to predict the paper-bill spread and real output – www.sciencedirect.com [PDF]
