The decrease in European FX volatility during the last decade has occurred because of
A)the stabilizing force of the euro.
B)reduction in inflation rates in European countries.
C)the reduced volatility in many emerging-market countries.
D)the greater volatilities of Asian currencies.
E)Answers A and B only.

Question

Quizplus · Accepted Answer

Both answers A and B contribute to the decrease in European FX volatility. The introduction of the euro has provided a stabilizing force in the region and reduction in inflation rates in European countries has also helped to reduce FX volatility. The reduced volatility in many emerging-market countries and the greater volatilities of Asian currencies are not significant factors in the decrease in European FX volatility.

The Decrease in European FX Volatility During the Last Decade