Abstract

The economies of Poland and Sweden are quite different, but the Polish and Swedish foreign exchange markets are similar. The main difference between them is the size of turnover, the Swedish market is more than five times larger than the Polish one. The aim of the paper is to identify factors determining the relationship between exchange rates volatility of the Polish zloty, Swedish krona, U.S. dollar and euro in the context of the development of the foreign exchange markets. The strong correlation of the EUR/USD exchange rate with the USD/PLN and USD/SEK exchange rates can be explained by the transactional and currency structures of the Polish and Swedish markets.

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