| Previous study of exchange rate volatility mainly focused on how exchange rate volatility impact a country's import and export trade fluctuations and the impact of export production decisions, and always focus on the study of a country's effective exchange rate. In this paper we start from the basic definition of the exchange rate that a country's currency exchange rate is that the price of the currency of another country, we choose bilateral exchange rate volatility between the each pair of countries instead of the effective rate of one country. We select the sample of 203 countries, divided them into developing countries group and industrialized countries group to test in the empirical models .Empirical models were constructed between the other economic variables such as trade dependence, the total economy size of the two countries, bilateral economic differences, the dissimilarity of export on the impact of bilateral exchange rate volatility.We also select the samples from east Asia, south America and central America, calculate the bilateral exchange rate volatility between countries in the given region as well as between the five major currencies. We make a regression to test if the explanatory variables affect the bilateral exchange rate volatility between different countries in a different way. The empirical results show that trade dependence between the two countries on exchange rate volatility there is a significant negative correlation between the two countries exchange rate volatility on the total economy there is a significant positive correlation between the economic differences between the two countries the bilateral between the developed exchange rate fluctuations is not obvious, but between developing and developed countries on the bilateral exchange rate fluctuations there is a significant positive correlation. The dissimilarity of export between the two countries on the bilateral exchange rate fluctuations has positive impact on the exchange. |
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