High exchange rate volatility can be caused by local currency pricing, which stops changes in exchange rates from affecting consumer prices. This volatility is not strongly linked to other economic factors. Factors like incomplete international financial markets, how products are priced globally, and random deviations from interest rate parity can make exchange rates very volatile. This volatility can be much higher than changes in economic fundamentals, and the impact of exchange rates on the economy can be disconnected from other economic indicators.