Best Exotic Forex Pairs to Trade

Looking for something a little more exciting to spice up your trading portfolio? Look no further than exotic forex pairs!

These currency pairs may not be as well-known as their major counterparts but they offer unique advantages and profit potential. However, there are also some disadvantages, such as higher spreads.

This guide will explore the best exotic forex pairs to trade and what makes them stand out.

What are exotic forex pairs?

First, let’s talk about what exactly exotic pairs are.

Exotic forex pairs are currency pairs that consist of a major currency and a currency from an emerging or small market country.

These currency pairs are less commonly traded than major currency pairs like EUR/USD or USD/JPY, and they typically have wider bid-ask spreads, which means that the difference between the buying and selling prices is greater.

Examples of exotic forex pairs include

  • USD/TRY (US Dollar/Turkish Lira),
  • USD/ZAR (US Dollar/South African Rand),
  • USD/HKD (US Dollar/Hong Kong Dollar) and others.

Exotic forex pairs are considered to be more volatile than major currency pairs due to the economic and political instability that often characterizes emerging market countries.

However, this volatility can also present trading opportunities if you are willing to take on the increased risk.

With that out of the way, let’s talk about the best exotic pairs you can trade.

What are the best exotic forex pairs?

Although there are plenty of exotic forex pairs, a few stand out. Here are these:

USD/MXN (US Dollar/Mexican Peso)

The USD/MXN pair is highly volatile due to the Mexican peso’s sensitivity to changes in the global economy and its close relationship with the price of oil.

Mexico is one of the world’s largest oil producers, and oil price fluctuations can significantly impact the peso’s value.

USD/SGD (US Dollar/Singapore Dollar)

The USD/SGD pair is popular due to the reputation of the Singapore economy as stable and prosperous.

Singapore’s central bank, the Monetary Authority of Singapore, has a reputation for managing its currency well, which can contribute to a relatively stable exchange rate.

USD/SEK (US Dollar/Swedish Krona)

The USD/SEK is relatively stable compared to other exotic pairs in our list. This is due in part to Sweden’s well-managed economy.

Additionally, the Swedish krona is closely tied to the oil price, which can provide some predictability in the pair’s movements.

EUR/TRY (Euro/Turkish Lira)

The EUR/TRY is highly volatile due to the instability of the Turkish Lira. Turkey’s economy and political situation can be unpredictable, which can contribute to significant price movements in the pair.

USD/TRY (US Dollar/Turkish Lira)

The USD/TRY is similar to the EUR/TRY in that it is highly volatile due to the instability of the Turkish Lira. However, the USD/TRY pair may be more attractive to traders due to the US dollar’s status as a safe haven currency.

Final thoughts

Exotic forex pairs can provide opportunities if you can handle high volatility. However, they also come with increased risk due to their lower liquidity and heightened sensitivity to global economic events, political events, and other factors.

You should conduct thorough research and analysis and use proper risk management strategies to limit risk exposure. You will also need to use a broker with low spread such as IC Markets as exotic currency pairs tend to have larger spreads even at the best of times.