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What are Exotic Currencies?

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An exotic currency is a type of currency that isn’t widely traded because of high volatility and limited liquidity. These currencies are usually more susceptible to local economic factors.

Here are some examples of exotic currencies:

  • Thai Baht (THB) – The currency of Thailand.
  • Indonesian Rupiah (IDR) – The currency of Indonesia.
  • South African Rand (ZAR) – The currency of South Africa.
  • Turkish Lira (TRY) – The currency of Turkey.
  • Brazilian Real (BRL) – The currency of Brazil.
  • Russian Ruble (RUB) – The currency of Russia.
  • Mexican Peso (MXN) – The currency of Mexico.
  • Indian Rupee (INR) – The currency of India.
  • Malaysian Ringgit (MYR) – The currency of Malaysia.
  • Hungarian Forint (HUF) – The currency of Hungary.

What are examples of popular exotic currency pairs?

Exotic currency pairs are currency pairs for trading that involve one exotic currency and one major currency.

Some popular examples include the following:

  • GBP/ZAR (British Pound/South African Rand)
  • USD/INR (US Dollar/Indian Rupee)
  • EUR/TRY (Euro/Turkish Lira)

What risks are associated with exotic currencies regarding payroll?

Exotic currencies can bring on unique risks, especially in the context of payroll.

Here are some of the biggest risks that can surface:

Intensified currency conversion costs

Because of the complex process involved, converting funds from a major currency to an exotic one can bring on additional fees and costs.

Exchange rate volatility

Because exotic currencies are more volatile than major currencies, the exchange rate is likely to be volatile as well.

Political and economic instability

Many countries with exotic currencies are often prone to economic and [political instability, leading to business disruptions, delays, and overall uncertainty.

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