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What are Exotic Currencies? Will I get less for my money

Published on 7 February 2017 in More Information - Pages by Raffick Marday

Bank Exchange Rates for Exotic Currencies

What are Exotic Currencies?
Trading in foreign exchange is one of the most lucrative pursuits in the world. The risk to reward ratio is very high. In just a few hours, fabulous fortunes can be made...and lost so check Bank Exchange Rates for Exotic Currencies!

Interbank Rates and Exotic Currencies
The most sophisticated and successful traders are knowledgeable and know the vital importance of timing. What was considered a wise decision five minutes ago might be a terrible decision now.

Hence why they are always monitoring and researching the markets. To learn market trends on how the interbank rates are moving and what could affect exotic currencies. If you a planning to travel to an emerging country, to invest in one, or you are a foreign exchange trader, it is wise to know about the next few points we need to be exploring.

In the foreign exchange markets, currencies are classified into a major, minor and exotic. What are exotic currencies? Read on.

What are interbank rates?

The Interbank rate can have two meanings: First the interbank can mean the rate of interest banks charge for short-term loans. The second meaning the interbank rate can mean the price at which high-volume foreign exchange transactions are conducted.

What are exotic currencies and their characteristics?
So what are exotic currencies and their characteristics? Well, they are currencies that are not traded by everyone and are not the most used ones. Some exotic currencies are in fact untradable due to restrictions meaning only the banks in that country can buy and sell and they are not offered to the open market. Major currencies which are traded regularly by foreign exchange traders are, Euro, Dollar, Pounds, Deutschmark, Yen...

Exotic currencies are currencies of emerging nations. Such as that Africa, Iraqi, Brazil, Singapore and Thailand.
They have the following key characteristics: are thinly-traded, not popular (and, as such are illiquid and have low trade volumes), lack market depth, and are expensive because of their bid-ask spread is often large. Its difficult to trade them in a usual brokerage account. They are minor currencies. Just because they are exotic currencies you should not think they are a weak currency or are undervalued by the currency markets but more that they are unpopular or limited access to buy and sell.

Examples of Exotic currencies

· Iraqi Dinari.
· Uruguay Peso.
· Thai Baht.
· South African Rand.
· Danish Krone.
· Turkish Lira.
· Hong Kong Dollar.

What are exotic currency pairs?
We have exotic currency pairs when a major currency is paired with the currency of an emerging market. For example, USD/SGD US Dollar/ Singapore Dollar.

Why do banks charge more for exotic currencies?
The average rate your bank will charge you on foreign exchange transactions is around 4 percent, but for exotic currencies, they charge a lot more. This is because these currencies are not as liquid as the majors and they are traded in low volumes.
Due to this, the high street bank needs to make a greater profit margin so they will charge a higher rate to compensate for the low trade volumes. Banks are all about margins so selling an exotic currency means higher rates to match the volumes they are selling a major currency.

We have reviewed the interbank rates and exotic currencies, and we hope that you would leverage the information to increase your earnings and net worth.

The rates shown below are based on today's Interbank rates at 07.15 AM. Please use the currency converter for current live rates or if you require a currency quotation then please use the request info to get a free individual quotation with no obligation to trade.

Please use the currency calculator to obtain other currency rates and the current exchange rates, bank exchange rates for exotic currencies

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