Most veteran traders agree to the fact that all currencies, no matter which economy it represents, holds great prospective to earn a profit. Every global event is responsible for market fluctuation and stable economies, at times, are least to be affected. However, emerging economies show large variations in currency valuation and chances of “make profit forex” increase. Find out if investing in exotic currencies is worth it or not and know how the global scenario might affect these economies.
Exotic currencies and how to make profit forex from these
Exotic currency pairs are those pairs which are formed by combining a growing or stable but smaller economy with one of the major ones. These are termed exotic as these costs higher than other pairs and feature among the least traded ones due to its lack of liquidity.
For instance, China has recently surfaced as a strong economy by virtue of its increased rate of exports and GDP growth. Its economy has stabilised recently and its currency, thus, features in the exotic list. Similar is the case for Sweden, Norway, South Africa and Singapore when paired with USD.
As these are emerging economies and are still on the rise, their currencies are likely to appreciate, and you can make profit from forex using these pairs. But why are emerging economies this much lucrative to traders? Find out next.
Why invest in emerging economies?
Although these are priced high, investing in these exotic pairs can actually turn out to be more profitable than major pairs.
- An emerging economy like South Africa attracts new foreign investors. China already holds a strong market in this country while countries like India are searching their way in. This creates a demand for South African Rand and is likely to appreciate its valuation. Expect to make profit from forex with this.
- Recently, China has lost its claim over the South China Sea in the UN. This means that the US continues to operate trading operations in this region. Also, Beijing and Washington are in some kind of rivalry over this issue. This has led China to reduce its imports slightly while its export rate may remain the same. This will appreciate Hong Kong Dollars to some extent.
- Sweden showed a GDP increase of 3.9% in 2015. Singapore’s economy is considered most open in the world and comes with low tax rates. On the other hand, Turkey is recently seeing a surge in tourism with books and movies featuring this country’s history. “Making profit forex trading” comes into play here as these combined factors determine currency’s valuation.
The fact is, most traders turn away from these currencies and do not consider trading with these at all. However, if you take recent events into account, these currencies are likely to show an upward trend and your goal of “make profit forex” will be achievable. Do your research well and look out for more recent events that are likely to affect these exotic pairs. Remember, “It is at these least visited places that you may find a priceless gem.”