Cross currency pairs and Exotic Currency pairs

In the previous article - Major Currency pairs in the forex world, we just focused on the major currency pairs but there are lots of other currency pairs which have less trading volume compared with the major ones. We can split the currency pairs into three groups: the majors, the crossed currency pairs and exotic currency pairs.

As we discussed in the previous article, all the major currency pairs that are the major economic countries that are paired vs. the US dollars. The definition of cross currency is that a pair of currencies traded in forex that does not include the US dollar. Historically, a investor who wants to exchange a amount of money into a different currency will be required to first convert that money into US dollars, and then convert it again into the desired currency. The cross currency is a work around for this process. For example, GBP/CAD was invented to help investors or traders in England and Canada who wanted to convert their money directly without having to first convert it into US dollars.

Some cross currency pairs are as:
EUR/CHF-Euro vs. the Swiss franc
EUR/JPY-Euro vs. the Japanese yen
EUR/GBP-Euro vs. the British pound
EUR/CAD-Euro vs. the Canadian dollar
EUR/AUD-Euro vs. the Australian dollar
EUR/NZD-Euro vs. the New Zealand dollar
GBP/CHF-British pound vs. the Swiss franc
GBP/JPY-British pound vs. the Japanese yen
GBP/AUD-British pound vs. the Australian dollar
CAD/JPY-Canadian dollar vs. the Japanese yen
AUD/JPY-Australian dollar vs. the Japanese yen
AUD/CAD-Australian dollar vs. the Canadian dollar
AUD/NZD-Aussie dollar vs. the New Zealand dollar
AUD/CHF-Australian dollar vs. the Swiss franc
NZD/JPY-New Zealand dollar vs. the Japanese yen
CHF/JPY-Swiss franc vs. the Japanese yen

The cross currency trading does not have very high volume compared with major currency pairs and also more difficult to analyse the trend.

Lets talk about Exotic currency pairs now. These pairs are emerging economies rather than developed / industrialized countries, such as parts of Middle East, Africa and Asia. They are not common in the forex market. The activities and trading volume in the market is quite low comparing with the currency pairs above and major currency pairs. They are also not suitable to beginners.

Some examples of exotic currency pairs:
USD/TRY-U.S. dollar vs. the Turkish lira
EUR/TRY-Euro vs. the Turkish lira
USD/ZAR-U.S. dollar vs. the South African rand
USD/MXN-U.S. dollar vs. the Mexican peso
USD/SGD-U.S. dollar vs. the Singapore dollar

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