Calculation and assessment of the exchange rate fluctuation index

Abstract

This study examines the theoretical and methodological aspects of calculating and assessing the exchange rate fluctuation index. Quantitative measurement of exchange rate fluctuations is important for evaluating their effects on economic stability, inflation, international trade, and broader macroeconomic processes. The study proposes an approach to constructing an exchange rate fluctuation index based on exchange rate dynamics, the rate of change, and standard deviation. The proposed index makes it possible to comprehensively assess the degree of volatility in the foreign exchange market, identify periods of high and low volatility, and evaluate exchange rate-related risks. The study also considers the potential application of the index for assessing monetary policy effectiveness, identifying potential foreign exchange market risks at an early stage, and forecasting exchange rate dynamics. The findings may provide a methodological basis for improving economic policy measures aimed at maintaining exchange rate stability and strengthening macroeconomic resilience.