EXCHANGE RATE VOLATILITY OF UKRAINE’S MAIN TRADING PARTNERS

Abstract

Ukraine, as an open economy under conditions of Russian aggression, is highly vulnerable to the import of exogenous shocks. This is embodied in exchange rate volatility and the emergence of corresponding risks. Most studies are aimed at direct, explicit, or transactional risks. They reflect the negative impact of exchange rate fluctuations on economic entities' cash flows in foreign economic activities. However, changes in currency prices can also affect the subjects oriented to the local market and not carry out operations in foreign currencies by changing competitiveness. One speaks about the indirect, implicit, or economic currency risk in this case. The latter generally arises in the event of volatility in the exchange rates of currencies of importing countries or competitors. The study is devoted to the analysis of indirect currency risks, which reflect potential adaptations of competitiveness due to changes in exchange rates. For this purpose, the currencies of the countries that account for about 80% of Ukraine's trade turnover over the last 10 years, namely the euro, Japanese yen, British pound, Swiss franc, yuan, Indian rupee, Czech krona, Polish zloty, Hungarian forint, and Turkish lira were chosen. The article aims to assess the volatility of exchange rates of Ukraine's main trading partners as a stage of analyzing economic currency risks. The paper uses statistical methods for volatility estimation and distribution characteristics, namely standard deviation, skewness, and kurtosis. The obtained results show that some currencies have a high level of asymmetry and excess, indicating possible unpredictable rate changes. The calculated indicators' generalization allows identifying currencies with relatively high and low risk. The article complements the results of previous studies, as it covers both major reserve currencies and currencies of leading countries whose markets are developing globally and in Europe. Estimates of asymmetry and excess exchange rate distributions are essential for effective currency risk management.