The Analysis of Exchange Rate Volatilities During (2010-2012)

Exchange rate volatility has adverse impact on economic variables and macroeconomic stability. For instance، great uncertainty in relative prices، investment horizon reduction، disrupting decision making processes and tarnishing central bank’s reputation are consequences of exchange rate volatility. Since mid-2010 non-official exchange rates increased and from that time on، there have been some volatility in exchange market. This study explains the origin and reasons of these volatilities and their continuity over time according to first generation of currency crisis. The results show that the imposed sanctions against Iran’s financial sector is the origin of volatilities and speculative attacks result from cumulative harmful liquidity are reason of their continuity. Moreover، the lack of efficient and deep exchange rate system intensified the impact of sanctions on exchange market.