What are Exotic Currency Pairs?
The Exotics
Forex Trading Glossary
Quick Answer: Exotic pairs combine a major currency with an emerging market currency (e.g., USD/TRY). They have wider spreads, lower liquidity, and higher volatility.
What Are Exotic Currency Pairs?
Exotic pairs combine a major currency with one from an emerging or smaller economy—examples include USD/TRY, EUR/SEK, or USD/ZAR. They offer unique opportunities but come with additional risks.
Considerations for Exotic Pairs
- Wide spreads: Transaction costs can be significantly higher.
- Lower liquidity: Slippage and gaps are common.
- Event-driven moves: Sensitive to political instability and commodity cycles.
- Volatility: Daily ranges can be multiples of major pairs.
Related Terms
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