Exotic currency pairs

Exotic pairs set a major currency against one with thinner liquidity: the Mexican peso, the South African rand, the Turkish lira, the Nordic and central European currencies, and several Asian currencies. Trading costs are wider, and moves can be larger and more abrupt, particularly around local political events and central-bank decisions. Some of these currencies are managed. The Hong Kong dollar trades inside a narrow band against the US dollar and the Danish krone is held close to the euro, so their volatility is tiny and their surprise readings can be undefined rather than large — a pegged series has no volatility to measure a move against. Others are among the most sensitive currencies in the world to global risk appetite. The peso and the rand in particular tend to weaken quickly when markets turn defensive, which is why they often appear at the extremes of the currency-strength table on volatile days.