What is an exotic currency

nwrichard on Wed Jul 25, 2012 6:14 pm

There seems to be a new buzz word used now. It is "exotic currency" As though this is something magical. I took the liberty to cut and past a couple of websites definitions and examples of exotic currencies to others will not be spellbound when they hear the term, I hope it helps.

from Investopedia:
"Investopedia explains 'Exotic Currency'
Exotics are not considered major currencies because they are not easily traded in a standard brokerage
account. Major currencies include the U.S. dollar, Euro, Canadian
dollar and Swiss franc. Examples of exotic currencies include the Thai
baht, Uruguay peso or Iraqi dinari.

From Onanda :
"

Exotic Currencies

We receive very few price points (one price point per week
for some currencies) from our data suppliers for some emerging market
currencies.

The following is a representative list of these exotic currencies. It is not necessarily complete.

AFN Afghanistan Afghani
AMD Armenian Dram
AWG Aruban Florin
AZN Azerbaijan New Manat
BHD Bahraini Dinar
BWP Botswana Pula
BYR Belarusian Ruble
CDF Congolese Franc
DZD Algerian Dinar
EGP Egyptian Pound
EEK Estonian Kroon
ETB Ethiopian Birr

GEL Georgian Lari
GYD Guyanese Dollar
IDR Indonesian Rupiah
IQD Iraqi Dinar
IRR Iranian Rial
JOD Jordanian Dinar
KGS Kyrgyzstanian Som
LBP Lebanese Pound
LRD Liberian Dollar
MAD Moroccan Dirham
MNT Mongolian Tugrik
MUR Mauritius Rupee
MWK Malawi Kwacha

MYR Malaysian Ringgit
MZN Mozambique new Metical
OMR Omani Rial
QAR Qatari Rial
SLL Sierra Leone Leone
TJS Tajikistani Somoni
TMT Turkmenistan new Manat
TZS Tanzanian Schilling
UZS Uzbekistan Som
WST Samoan Tala
XAF CFA Franc BEAC (1)
XOF CFA Franc BCEAO (2)

Notes

CFA Franc BEAC (XAF) is the currency for Cameroon, Central African Republic, Chad, Congo, Equatorial Guinea and Gabon.
CFA Franc BCEAO (XOF) is the currency of Benin, Burkino Faso, Cote D'Ivoire, Mali, Niger, Senegal and Togo.
You may see the message, "Estimated price based on daily US dollar
rates." This message is displayed for currency pairs where relatively
little data is available, and means that the exchange rate for the
converted currencies was computed from cross rates with the US dollar.

Read more: http://www.investopedia.com/terms/e/exotic_currency.asp#ixzz21ftL22h2 "

From World Currency Watch :
"Trading Exotic Currencies

The Quickest Way to Grab Profits from Emerging Markets: Currencies.

Right now, the biggest opportunities by far are in the emerging
market currencies (also known in the business as “exotic currencies”).

These are the currencies of countries like Poland, the Czech
Republic, Thailand, South Korea and South Africa, to name just a few.

These countries are a generation or so behind the major developed
economies like the. But they are growing much faster and making up for
lost time with a vengeance.

Take Brazil for example. Just a few decades ago, the country was a
mess. Brazil had very high unemployment rate, hyperinflation, political
instability, you name it.

Today, Brazil has an all-time low unemployment rate, record consumer confidence, and an uncontested thriving economy.

Brazil is not alone. Many other emerging market nations are going
through the same experience. What happened to them? They simply learned
from their past mistakes.

During the 1990s, there was no better place to find economic turmoil
than emerging markets. The Mexican peso crisis in 1994, the Asian crisis
in 1997, and the Russian debt default in 1998 were some of that
decade’s highlights.

Surviving a crisis is a harsh lesson for everyone involved. Naturally
after enduring a crisis, most emerging markets wanted to ensure it
never happened again. So leaders started making some serious reforms.

Today most emerging markets are collecting the fruits of those
reforms. Most are sitting on piles of cash. That’s one of the reasons
most emerging markets recovered so quickly from the recent global
recession especially compared to the big developed nations like the U.S.
and E.U.

In fact, this all creates volatile moves that you can exploit by trading foreign currencies in the $4 trillion spot market.

An Easy Way to Make a Killing, Shorting the Dollar

It’s also amazing how much money is flowing into these emerging
markets. These capital flows are very important to currency traders
because it practically guarantees these countries’ currencies will move
quickly against the dollar.

They create very profitable trends for those who are trading in the
spot market, especially when there’s a well defined trend in the dollar.

As a currency trader, you can simply pair these stronger emerging
market or “exotic” currencies with the U.S. dollar for some decent
gains.

During the last weak dollar trend in the summer of 2010, our editor Evaldo Albuquerque helped his Exotic FX Alert subscribers pair the weak dollar with the stronger Mexican peso and Polish zloty for gains of 46% and 108% (among others).

It’s a simple strategy. But it really is as easy as watching where
the capital flows will head next and being ready to jump on these
opportunities in the spot Forex market.

For more recent examples of emerging market trades, check out our research service, Exotic FX Alert.
This service is designed to help you trade currencies from the emerging
markets in the spot Forex market. You’ll receive timely
recommendations, along with elite analysis on these “hard-to-reach”
markets, videos and timely answers to your questions in monthly Q&A
issues. To learn more, see Exotic FX Alert.

Disclaimer: Futures, Options, and
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large potential risk. You must be aware of the risks and be willing to
accept them in order to invest in these markets. Don’t trade with money
you can’t afford to lose. This is neither a solicitation nor an offer
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made that any account will or is likely to achieve profits or losses
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any trading system or methodology is not necessarily indicative of
future results.

CFTC Rule 4.41 – These results are
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of any investment. "

**Terbo56** on Wed Jul 25, 2012 7:03 pm

nwrichard- An exotic currency would probably be the type that you would see in a bar in 'Jamaica Mahn'-

You know, the money from another country that when they make their first dollar, or whatever, they always put it in a picture frame, and then hang it on the wall behind the counter that the 'till' sits on- {cash register}- Very Happy