Good day everyone!
I heard a rumor today that the VND was no longer an exotic currency. Either the source is using the term "exotic" very loosely, or there has been a radical change in the global model of currencies. Or it is just a rumor.
Exotic currencies are simply currencies that are not the major currencies. There are lots of exotic currencies. The majors include: the US dollar, Euro, Canadian dollar, Swiss franc, British pound, etc. Exotics include the BRICS and other well known currencies, as well as a lot of other lesser known currencies. For example, the Singapore dollar, Hong Kong dollar, Chinese yuan, Brazilian real, Russian rouble, South African rand, Indian rupee . . .
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Currencies are either major or exotic. If theoretically the VND were no longer an exotic currency, then a radical change would have to have occurred in the global model of currencies whereby investors, institutions and countries would now buy and sell the VND to diversify and hedge their currency holdings.
Here are some definitions. To get to these links, you may need to bypass the ads – to do this, click on the link at the top right of the page.
Definitions from Investopedia:
Definition of 'Exotic Currency' -- A foreign exchange term for a thinly traded currency. Exotic currencies are illiquid, lack market depth and trade at low volumes. Trading an exotic currency can be expensive, as the bid-ask spread is usually large.
Investopedia explains 'Exotic Currency' -- Exotics are not considered major currencies because they are not easily traded in a standard brokerage account. Major currencies include the U.S. dollar, Euro, Canadian dollar and Swiss franc. Examples of exotic currencies include the Thai baht, Uruguay peso or Iraqi dinari.
List of exotic currencies from a Forex site:
The green chart lists the exotic currencies. Below that in the “Key” you can see all the countries. Note that all the BRICS are in this list, as well as Hong Kong, Singapore . . .
I hope the rumor is true because it would mean not only that the VND has RV’d but that we have a radical change in the currency model. But I would be very happy if the VND simply continued as an exotic currency and just RV’d.
Have a great day! :)