Political events can cause currency volatility from "summary" of International Money and Finance by Michael Melvin
Political events have a significant impact on currency volatility. This is because political developments can create uncertainty in the market, leading to fluctuations in exchange rates. When there is uncertainty about the future political landscape of a country, investors may become more hesitant to hold onto that country's currency. As a result, the currency may depreciate in value as investors seek safer assets. One example of how political events can cause currency volatility is through elections. Elections are often seen as a source of uncertainty, as the outcome may lead to changes in economic policy or political instability. If investors believe that a particular c...
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