Let’s be honest: 2024 felt like the world decided to pour fuel on an already blazing geopolitical fire. War in Ukraine? Escalated. The Israel–Gaza conflict? Intensified. And if that weren’t enough, China and Taiwan took their rivalry right to the brink. Meanwhile, Houthi rebels in Yemen disrupted vital Red Sea shipping lanes, sending trade costs through the roof. Somehow, that was only the tip of the iceberg: South Korea’s Prime Minister made a dramatic power grab, France battled widespread civil unrest, and the UK Government hit rock-bottom approval ratings. On top of all that, far-right movements surged across Europe.
Over in the US, the old-new president—Donald J. Trump, has teamed up with the world’s richest man (yes, that one) to “share the throne.” They hinted at an all-out trade war and propped up Bitcoin to the point where it might even find its way into the US reserve. And if you were hoping for technology to calm everything down, well, rapid leaps in AI only added to the chaos—doubling as an economic accelerator and a massive threat to countless jobs.
Rapid advances in AI technology compounded these challenges, triggering both remarkable economic booms and widespread fears of job displacement.
Collectively, these developments weighed heavily on global stability, with immediate repercussions for asset prices and currency markets.
With soaring inflation and market volatility, central banks also took central stage.
Adding another layer to this ever-changing puzzle, central banks continued their juggling act with interest rates. In the US, the Federal Reserve kept sounding the alarm on inflation, opting for a firmly hawkish stance throughout 2024. That move alone kept the US dollar on a stronger footing, heightening FX swings whenever analysts so much as whispered about rate changes.
Meanwhile, the European Central Bank (ECB) and Bank of England (BoE) did their best to handle sky-high inflation on their side of the pond, issuing rate hikes of their own. Across Asia, the Bank of Japan (BoJ) tweaked its negative-rate and yield-curve-control policies, occasionally surprising the market and rattling the yen. The Swiss National Bank (SNB), never one to just sit back, kept a close watch on the franc, adjusting its policy rates by small increments to curb excessive appreciation.
For smaller currencies, 2024 was no walk in the park either. Sanctions on Iran tightened further, potential escalation with Israel loomed, and places like Argentina and Turkey faced enough political and economic uncertainty to keep their exchange rates on a roller-coaster ride. Interestingly, currencies under partial pegs or capital controls rode out daily volatility with a little less drama—though their long-term devaluation trends were tough to ignore.
Spotlight on the Numbers
Our deep dive into 2024 reveals just how much these events shaped currency volatility. Below, you’ll find tables, charts, and jaw-dropping year-over-year comparisons—highlighting which currencies whipsawed the hardest and where we might be headed in 2025. We also produced a comprehensive statistical report on international payments in 2024.
Major Currency Volatility
Major Currency Volatility Index
Most Volatile Currencies
- Despite how rough 2024 was for the major currencies, several “minors” stole the show in terms of sheer volatility.
- ILS (Israel): The shekel’s swings were bound to happen amidst ongoing regional conflicts and the looming threat of a larger clash with Iran.
- IRR (Iran): The rial suffered under tighter sanctions, shrinking oil exports, and the fresh spectre of direct confrontation with the US.
- RUB (Russia): Between the war in Ukraine and extended sanctions, the rouble struggled to gain any investor confidence, marking potential record lows.
- UAH (Ukraine): Amid massive infrastructure damage and reliance on Western aid, the hryvnia endured big highs and lows.
- ARS (Argentina): Hyperinflation plus political upheaval shook the peso—even as a new government worked to rein in spending.
- TRY (Turkey): High inflation and political divisions took a toll, exacerbated by Turkey’s involvement in Middle Eastern conflicts (and the possibility of a run-in with NATO or the US).
- ZAR (South Africa): Perennial political instability and corruption allegations left the rand on shaky ground in 2024.
- MXN (Mexico): Uncertainty leading up to national elections and unpredictable US tariff talk kept the peso on its toes.
Volatility Index for Minor Volatile Currencies
How is Volatility Higher for Major Currencies Over Minor Currencies
Our research shows that the volatility index for these so-called “most volatile” minor currencies can actually look lower than that of the major currencies. Why the mismatch? The short answer is that liquidity, market depth, and global risk sentiment are doing a complicated dance:
- Major Currency Speculation: When multiple hot spots around the globe flare simultaneously, big institutions usually zero in on the most liquid pairs—USD, EUR, JPY—causing sometimes jarring short-term swings.
- Safe-Haven Rushes: Nerves often push investors to “safe” havens like USD, JPY, or CHF. That flight can trigger dramatic price spikes in these currencies compared to more thinly traded pairs.
- Capital Controls: Certain minor currencies operate under strict regimes or “soft pegs,” which can muffle daily fluctuations even if the currency’s fate over the long haul is to drop like a rock.
- Already Distressed: Some smaller currencies (like ARS) are already priced so low that monthly moves appear modest relative to big shifts in the USD or EUR.
- Speculator Focus: With fewer traders entering minor currency markets, global headlines might not always translate into immediate volatility—unless there’s a direct local trigger.
In short, big money usually piles into big markets, intensifying volatility for the majors, while smaller currencies can look deceptively calm on a day-to-day basis—even if they’re anything but stable over the long term.
Currency Volatility in 2024 vs Previous Period
When you compare 2024 with 2023, there’s little doubt that this year ramped things up a few notches. It wasn’t just one factor—rather a perfect storm of interest-rate divergence, geopolitical crises, and technological upheavals. Our data shows:
- EUR/USD monthly percentage-change volatility surged from 5.2% in 2023 to 7.3% in 2024.
- GBP/USD shot up from 5.7% to 8.1%, while USD/JPY rose from 4.9% to 6.8%.
Put simply, 2024 forced businesses and investors to adapt to bigger and more frequent market swings than the previous year.
Whats to Come in 2025?
Now, predicting 2025 is a bit like trying to forecast the British weather in April—anyone who claims to know for certain is probably fooling themselves. Still, many analysts, including ourselves, suspect another turbulent year. Don’t take our word for it, though:
Here are some quotes from the media about expected volatility:
"Our bottom line is that this is not the time to take a lot of excess exposure risk on FX, as it may prove to be the dominant story of 2025,"
"Investors anticipating another calm year in 2025 should be on guard for more shocks like the one seen in August as uncertainty around Donald Trump’s tax and tariff policies threaten to roil markets,"
Christian Dass and David Marino, https://finance.yahoo.com/news/wall-street-eyes-2025-volatility-050000417.html
"In 2025, currency markets will remain significantly volatile as economies, central banks and geopolitics continue to change,"
The Kingdom Bank, https://blog.thekingdombank.com/forex-market-in-2025/
"2025 will be dominated by currency volatility that could lead to a 'sharp' correction,"
KKR, https://wallstreetconservative.com/financial-news/currency-chaos-ahead-why-2025-could-spell-trouble-for-investors/
What Can Drive FX Volatility in 2025?
We believe business foreign exchange companies are going to see a lot of activity from businesses trying to protect against the what could be inevitable volatility.
- Middle East Conflict Escalation: An expanded Israel–Iran confrontation, especially one involving the US, could spike oil prices and send safe-haven currencies soaring.
- China–Taiwan Tensions: A full-blown crisis in the Taiwan Strait might disrupt global supply chains and turbocharge volatility in the Asia-Pacific, pushing markets into another round of “risk-off” behaviour.
- AI’s ‘Singularity Moment’: Rapid AI developments could jolt labour markets in unpredictable ways—potentially forcing central banks to rethink policies on the fly.
- Russia–Ukraine War Expanding: If the conflict spreads to Eastern Europe, currency markets could witness the kind of disruption not seen for decades, especially across European trading blocs and energy-linked currencies.
- Worsening Inflation: It is definitely possible that inflation with tick somewhat higher with the planned US tariffs.
Overall, 2025’s currency markets are poised for another year of amplified volatility, echoing the turbulent conditions of 2024 but with additional layers of risk. By maintaining an active watch on these evolving factors, businesses and investors can better navigate the uncertainty and protect their global financial interests.
-min.webp)
