When trading the Forex market, it’s always safer to stick to the major currency pairs. Not only do they have a lot of trading volume, but that also ensures they remain largely stable. On the other hand, since there are only just a few traders interested in Forex exotic pairs, they tend to be very volatile. It is therefore not uncommon to see huge shifts in currency strength in mere hours, and that makes them risky. Nevertheless, these huge shifts also present excellent trading opportunities and fast profits. Just think of them as for how cryptocurrencies also have extremely high volatility.
Which are the most reliable Forex exotic pairs?
Before you just jump right in and begin trading these Forex exotic pairs, there are a few things you will need to consider. Based on those factors, then can you pick some reliable Forex exotic pairs to trade.
The Swedish Krona
According to the Bank for International Settlements (BIS), the krona is among the most heavily traded Forex exotic pairs. From 2013 to 2016, it rose from 11th position to the 9th position, beating the New Zealand dollar and the Mexican peso. The main reason behind the rise and popularity of the krona is its general stability. Sweden itself is considered among the most stable economies worldwide, receiving a triple-A rating from the big three credit rating agencies. This economic stability means that the krona itself doesn’t suffer extreme volatility.
Compared to, say, the Mexican peso and New Zealand dollars, those economies are dependent on specific industries that make them unstable. For example, the peso suffered due to declining oil prices and the election of President Trump. Meanwhile, the NZ dollar was affected by declining commodity prices worldwide. The Swedish krona, therefore, makes for an excellent option among other Forex exotic pairs.
The Chinese Yuan/Renminbi
The size of the Chinese economy automatically places the yuan among the best Forex exotic pairs. China is a driver of economic growth, and changes in the economy itself can make for excellent trading opportunities. Appearing as the 8th most traded currency worldwide, its popularity is also on the rise. The Yuan is a great option for Forex exotic pairs traders because it generates strong long-term trends. Consider the general uptrend in the yuan’s strength all through 2017 due to the growing Chinese economy.
The main reason is that, as a result of its economic size, the yuan becomes a major player in the global Forex industry, capable of setting long-term trends. Thanks to this, the yuan is wonderful for swing traders and long-term traders who hold on to positions for weeks and months. The only problem is that there may not be many Forex brokers who offer the USD/CNY among Forex exotic pairs.
The Mexican Peso
Although the Swedish krona may be more stable than the peso, there is a lot more volatility in the latter. Changes in weather across the year, global commodity prices, economic policies and even political events all affect the peso significantly. Due to this, the peso can provide a lot of trading opportunities all through the year. Whereas the Chinese yuan is great for long-term investors, the peso can generate huge currency fluctuations in just days. Besides, there are more Forex brokers that offer the peso among Forex exotic pairs as there are who do the yuan.