Why Are Currencies So Volatile? The Global Trade System Is Shaking

📉 UN warns: The world’s trade system is at risk of derailment.

UN Secretary-General Antonio Guterres has warned that the global trade system is “at serious risk,” as rising tariffs, debt burdens in developing nations, and geopolitical tensions reshape global supply chains.

 

💱 How does this affect the currency market?

When global trade slows, capital flows shift rapidly. Investors tend to exit risky assets and move into safe-haven currencies like the US dollar or Japanese yen.

Meanwhile, export-driven currencies — such as the euro or emerging-market currencies like the Thai baht — often weaken due to lower global demand.

 

📊 Market Reactions:

- USD strengthens as investors seek safety.

- EUR and emerging-market currencies decline amid global uncertainty.

- Gold and Bitcoin see renewed demand as alternative stores of value.

 

🔍 Traders should watch:

- Upcoming IMF and WTO statements on trade outlook

- Manufacturing PMI data from the US, Europe, and Asia

- Developments in the next round of trade tensions between major economies

 

🎯 In short:

When global trade slows, money flows toward stability — and that’s why currencies around the world are moving wildly.