In the forex world, exotic pairs are made up of one major currency paired with the currency of an emerging economy like Brazil, Mexico, or a super exotic country like Iran*.
|Currency Pair||FX Nickname||Symbol|
|Ms. USA / Mr. Brazil||Dollar – Real||USD/BRL|
|Ms. USA / Mr. Mexico||Dollar – Peso||USD/MXN|
|Ms. USA / Mr. Hong Kong||Dollar – Hong Kong Dollar||USD/HGD|
|Ms. USA / Mr. Singapore||Dollar – Singapore Dollar||USD/SGD|
|Ms. USA / Mr. South Africa||Dollar – Rand||USD/ZAR|
|Ms. USA / Mr. Thailand||Dollar – Baht||USD/THB|
|Ms. USA / Mr. Denmark||Dollar – Krone||USD/DKK|
|Ms. USA / Mr. Sweden||Dollar – Swedish Krona||USD/SEK|
|Ms. USA / Mr. Norway||Dollar – Norwegian Krone||USD/NOK|
The exotic pairs in the currency market have a pretty fair relationship, because both sides look exotic in the eyes of one another. But as pretty as these exotic pairs may look, currency traders don’t bet on them that much and they are not traded as heavily as the majors or minors. And that’s why transaction costs for trading the exotic pairs are actually higher. The spreads for these pairs can sometimes be twice or three times larger than the other pairs.
So having this in mind, you might want to forget about trading the exotics currency pairs on a day-to-day basis, and just enjoy a cheap real-life flight to an exotic country— using the money that you made trading the minors and majors in the currency market.
* Iran = Persia, NOT Shah’s of Sunset