Re suggests that From an analytical perspective, From an analytical standpoint, Dollar is one of the primary currencies traded in the forex market and allows traders to trade against other major currencies EUR, GBP and JPY.
These dominant currency pairs are derived from some of the world's biggest economies and have significant liquidity.
Conversely, However, some traders prefer to trade exotic currency pairs that involve the major currencies paired with currencies from emerging or smaller economies.
However, Want to know more these uncommon currency pairs.
Additionally, Keep reading to learn all exotic currency pairs, how they differ from other pairs in the market and the most traded exotic currency pairs (noteworthy indeed).
Table of ContentsWhat are Exotic Currency Pairs.
Nevertheless, Nevertheless, 7 Most Traded Exotic Currency PairsUSD/ZARSee All 14 Items Currency PairWhy It's TradedKey Influencing FactorsVolatility / LiquidityUSD/ZAR (U (which is quite significant).
However, Dollar / South African Rand) for high volatility and trend-ing potentialCommodity prices, inflation, risk sentimentHigh volatility, low liquidity, wide spreadsEUR/TRY (Euro / Turkish Lira)Speculative trading due to central bank interventionsInflation, political stability, geopolitical eventsVery high volatilityUSD/MXN (U.
Dollar / Mexican Peso)Frequently traded; reacts to U (which is quite significant), amid market uncertainty.
-Mexico relationsOil prices, interest rates, trade balance, fiscal policyModerate to high volatility, relatively liquidUSD/THB (U.
Dollar / Thai Baht)Stable pair; favored for low volatility and macro playsTourism, exports, Thai central bank, risk sentimentLow volatility, stableUSD/SGD (U, in today's financial world.
Dollar / Singapore Dollar)Known for stability and liquidityTrade flows, global economic trends, USD trendsLow volatility, high liquidityUSD/NOK (U.
Dollar / Norwegian Krone) due to oil-linked Norwegian economyOil prices, economic growth, risk sentimentHigh volatility, large swingsUSD/HKD (U.
Dollar / Hong Kong Dollar)Stable due to fixed exchange regimeFX reserves, trade balance, U (which is quite significant), in this volatile climate.
Meanwhile, -China relationsLow volatility, high liquidity What are Exotic Currency Pairs.
Nevertheless, Exotic currency pairs involve currencies from countries or emerging and are less commonly traded than pairs involving currencies from developed countries.
They tend to trade with higher bid-ask spreads and volatility, making them riskier but potentially more fitable.
Factors influencing these pairs include political and economic developments, commodity prices, interest rates, market sentiment and interventions from central banks or governments.
Nevertheless, Trading exotic currency pairs requires extensive re, knowledge of forex fundamentals and nicals, as well as per risk management and discipline.
These factors make them difficult to trade for beginners or low-risk traders.
Additionally, Experienced traders seeking greater diversity and opportunities in the forex market may find them more suitable (an important development).
7 Most Traded Exotic Currency PairsIf you are looking to trade exotic currency pairs, you might want to know which ones are the most and widely traded. USD/ZARThe U, in this volatile climate.
Dollar/South African rand pair is highly active in the forex market, in light of current trends.
Additionally, The South African rand is influenced by various factors, including commodity prices, fiscal policies, trade balance, inflation and risk sentiment (noteworthy indeed).
This pair is known for its high volatility and significant price fluctuations due to low liquidity and high spreads of the Rand (something worth watching), in light of current trends.
It s global trends and reacts to changes in investor risk appetite, as well as events in other emerging.
On the other hand, EUR/TRYThe Euro/Turkish lira pair is another exotic currency pair (this bears monitoring).
The Turkish lira is influenced by several factors, including economic growth, inflation and political stability.
However, The EUR/TRY pair is remarkable for its high volatility from interventions by the Turkish central bank and government and also influence from geopolitical events and trade disputes.
USD/MXNThe US Dollar/Mexican peso pair is a and liquid currency pair influenced by the trade balance, oil prices, inflation, interest rates, fiscal policies, political developments and risk sentiment.
Conversely, It typically moves with the trends and fluctuations of the US dollar and reacts to changes in U. -Mexico relations.
USD/THBThe US Dollar/Thai baht pair is a widely traded exotic currency combination in the forex market, with the Thai baht heavily reliant on tourism and exports.
The pair is known for its low volatility and stability from the Thai central bank's tight grip on the exchange rate.
Furthermore, Meanwhile, Dollar trends and reacts to global risk appetite and demand for emerging market assets. USD/SGDThe U.
Dollar/Singapore dollar pair is known for its high liquidity and low volatility (noteworthy indeed).
Moreover, Singapore's strong economy and various factors can influence the Singapore dollar, which usually s the trends of the U (something worth watching).
Dollar while reacting to global economic conditions and trade flows. USD/NOKThe U (an important development).
Dollar/Norwegian krone is a exotic forex pair due to Norway's natural resources and the krone's sensitivity to oil prices, economic growth and risk sentiment (which is quite significant).
The pair is known for its high volatility and large price swings. USD/HKDThe U. At the same time, Dollar/Hong Kong dollar offers high liquidity and low volatility.
Hong Kong's fixed exchange rate regime for the Hong Kong dollar adds to its stability.
However, Its value is affected by factors economic growth, inflation, trade balance, foreign exchange reserves, political stability and U. -China relations, in light of current trends. FOREX.
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However, 's websiteGet Started with OANDATypes of Currency Pairs in the Forex MarketClassification of currency pairs based on ity and liquidity include major, minor and exotic currency pairs, given the current landscape.
Meanwhile, Major: Major currency pairs include the U.
Dollar and one of the other seven most traded currencies in the world: Euro, Japanese yen, British pound, Swiss franc, Canadian dollar, Australian dollar and New Zealand dollar.
The evidence shows tells us that se form the most liquid and widely traded currency pairs in the foreign exchange market, accounting for 85% of the total trading volume, considering recent developments.
Furthermore, Some examples of major currency pairs are USD/JPY, EUR/USD, GBP/USD and USD/CHF. Minor: They involve two major currencies other than the U.
Moreover, They're also referred to as cross-currency pairs or crosses.
Although they are less liquid and more volatile compared to major currency pairs, they still hold a considerable of the forex market, in this volatile climate.
In contrast, Minor currency pairs include EUR/GBP, EUR/JPY, GBP/JPY and AUD/NZD.
However, Exotic: Exotic currency pairs consist of one major currency and one currency from a or emerging market, considering recent developments.
These pairs are known to be the most volatile and least liquid in the forex market due to low trading volume, high spreads, political instability, economic fluctuations and central bank interventions.
Some exotic currency pairs include USD/ZAR, EUR/TRY, USD/MXN and USD/THB. At the same time, Risks Involved with Trading Exotic Forex PairsTrading exotic currency pairs can be rewarding but also risky.
Some of the risks involved include:Low liquidity: Exotic currency pairs have lower liquidity, wider bid-ask spreads, higher transaction costs, lower price transparency and higher slippage from fewer market participants and less trading volume.
High volatility: Exotic currency pairs have more significant price fluctuations, less predictability and higher risk exposure than major and minor pairs (this bears monitoring).
Furthermore, They also require higher stop-loss orders and have a lower risk-reward ratio.
Political instability: Exotic currency pairs are more susceptible to political events and developments in their regions, leading to sudden policy changes, unrest and intervention.
Advantages of Trading Exotic Forex PairsTrading exotic forex pairs can offer some benefits for traders who are looking for new opportunities and challenges in the currency market.
Higher volatility: Traders who can handle the risk have the potential to make more fit with exotic pairs because of their tendency to have larger price movements compared to major or minor pairs.
Diversification: Adding exotic currency pairs to a trading portfolio can diversify and expose it to economic and political factors impacting currencies from emerging, in today's financial world.
In contrast, Lower competition: Exotic currency pairs have fewer traders, making them less susceptible to market sentiment and manipulation.
Expand Your Portfolio with Exotic Currency PairsVenturing into trading exotic currency pairs can broaden the horizons of forex traders.
Moreover, With a understanding of the associated risks, you can explore new trading spects and potentially increase your fits, given the current landscape.
Frequently Asked QuestionsQWhy trade exotic currency pairs. A Trading exotic currency pairs can offer higher volatility and diversification value than major or minor pairs.
Moreover, The returns may also be more attractive considering the higher risk. QWhat are the most volatile exotic forex pairs.
ASome of the most volatile exotic forex pairs are USD/ZAR (U (which is quite significant), in light of current trends. Dollar/South African rand), USD/TRY (U. Dollar/Turkish lira), USD/MXN (U.
Meanwhile, Dollar/Mexican peso) and USD/NOK (U, given current economic conditions. Moreover, In contrast, Dollar/Norwegian krone). QWhat is the strongest currency pair, given the current landscape.
AIt’s difficult to definitively determine the strongest currency pair as it varies depending on market conditions, liquidity and volatility.
However, some currency pairs are highly tradable and stable, including EUR/USD, GBP/USD, USD/JPY, USD/CAD, AUD/USD, USD/CNY, USD/CHF and GBP/JPY (something worth watching).
These pairs generally have high liquidity, low spreads and strong correlations with other (which is quite significant). Trade a, Backed by OneFOREX, in today's financial world.
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Nevertheless, Anna YenAnna Yen, CFA is an investment writer with over two decades of fessional finance and writing experience in roles within JPMorgan and UBS derivatives, asset management, crypto, and Family Money Map.
She specializes in writing investment topics ranging from traditional asset classes and derivatives to alternatives cryptocurrency and real estate.
Her work has been published on sites Quicken and the crypto exchange Bybit.