Exotic Currency - Definition

Exotic Currency Definition

Exotic Currency is a thinly traded currency.  These currency pairs are traded by pure speculators.  Unlike the major currencies, Euro, US Dollar, etc. the markets for exotic currencies are not large enough for active trading.  Exotic currencies also have huge bid/ask spreads which makes it difficult for traders as well.  Speculators will buy an enormous amount of exotic currencies, in hopes that the currency at some point in the future will be of some value.  Examples of an exotic currency would be the Iraqi Dinari or the Uruguay peso.  Currently a trader can purchase 1 Million Dollars of Iraqi Dinari for roughly $500 US dollars.  Who knows, maybe 100 hundred years from now it will make a lot of people rich.

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