Why currency volatility could make a comeback

A decade of low inflation and interest rates smothered forex markets. Now consumer prices and rates are going up

Oct 30th 2021

FOREIGN-EXCHANGE markets were once a hotbed of lively, speculative activity. But today traders seeking an adrenalin fix must turn to assets like cryptocurrencies instead. Barring a brief surge early in the pandemic—and isolated goings-on in the Turkish lira—currency markets have gone quiet. Macro-trading funds no longer strike fear into central bankers and finance ministries with speculative attacks. The last sudden end to a major currency peg—that of the Swiss franc in 2015—was a result of the central bank taking investors by surprise, rather than the other way round.

This article appeared in the Finance & economics section of the print edition under the headline “Back with a vengeance”