Surging dollar awakens volatility in currency markets

On the rise: A money changer counts US dollar banknotes at a currency exchange office in Ankara, Turkey. The US currency is up 9.1% against the euro this year, on pace for its biggest annual gain in six years. — Reuters

VOLATILITY is bubbling up in foreign exchange (forex) markets, as bets on how aggressively central banks will tighten monetary policy in the face of surging inflation boost the dollar and exacerbate swings in global currencies.

The Deutsche Bank Currency Volatility Index, which measures expectations for gyrations in forex, has in recent weeks shot from a three-month low to its highest level since March, driven by gyrations in the US dollar, euro and Japanese yen as well as a broad range of other currencies.