An exotic pair combines a major currency (like USD, EUR, or GBP) with a currency from an emerging or smaller economy (like TRY, ZAR, THB, or MXN). Exotic pairs have wider spreads, lower liquidity, and higher volatility than majors or minors. They can offer larger price swings but carry greater slippage risk and higher swap costs.
USD/TRY (US dollar vs Turkish lira) is an exotic pair. It may have a spread of 15–50 pips compared to 1–2 pips for EUR/USD. A single day's move can exceed 500 pips during periods of political or economic turbulence in Turkey.
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