10 of the riskiest forex currency pairs

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10 of the riskiest forex currency pairs

Investing in financial markets involves risking your capital, but some assets are riskier than others. For example, in the forex market, some assets are relatively more volatile and increase the chance of losing capital. The volatility of the assets correlates with factors such as gold and oil price movements, inflation rates, domestic financial policies, international political and economic events, etc. This article introduces ten currency pairs in the Forex market with volatile price movements.
 

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GBP/JPY (British Pound/Japanese Yen)
Also known as the “Dragon,” this currency pair combines two highly volatile currencies. The British Pound is susceptible to political events, while Japan’s monetary policy influences the Japanese Yen. The combination of these factors results in substantial price swings, making GBP/JPY a high-risk forex pair.

EUR/AUD (Euro/Australian Dollar)
This pair represents the exchange rate between the Euro and the Australian Dollar. Both currencies are influenced by economic events in their respective regions and global commodity prices. However, due to the considerable distance between Europe and Australia, economic releases are often asynchronous, which can lead to sudden and significant price fluctuations in the EUR/AUD pair.

USD/ZAR (US Dollar/South African Rand)
The exchange rate between the US Dollar and the South African Rand is known for its high volatility. South Africa’s economy is influenced by political developments, labor strikes, and fluctuations in commodity prices, particularly gold and platinum. These factors make USD/ZAR a risky forex pair for traders.

USD/TRY (US Dollar/Turkish Lira)
This forex pair denotes the exchange rate between the US Dollar and the Turkish Lira. Turkey’s economy is characterized by high inflation and political instability, contributing to the Turkish Lira’s volatile nature. Therefore, trading USD/TRY can be risky due to the currency’s unpredictability and potential for rapid depreciation.

GBP/AUD (British Pound/Australian Dollar)
This currency pair involves the exchange rate between the British Pound and the Australian Dollar. Various factors, such as political events in the UK and commodity prices in Australia, influence both currencies. The combination of these influences can result in substantial price swings, making GBP/AUD a high-risk forex pair.

EUR/NOK (Euro/Norwegian Krone)
This pair represents the exchange rate between the Euro and the Norwegian Krone. Norway’s economy heavily depends on oil exports, making its currency sensitive to fluctuations in oil prices. As a result, the EUR/NOK pair can experience considerable volatility, particularly during periods of changing oil prices or economic uncertainty.

USD/MXN (US Dollar/Mexican Peso)
This forex pair denotes the exchange rate between the US Dollar and the Mexican Peso. Mexico’s economy is closely tied to the United States, and the Mexican Peso is influenced by changes in US economic policy, as well as domestic factors such as political uncertainty. Trading USD/MXN can be risky due to the currency’s susceptibility to sudden price movements.

GBP/CAD (British Pound/Canadian Dollar)
This currency pair involves the British Pound and Canadian Dollar exchange rate. Both the UK and Canada are major oil producers, making their currencies sensitive to fluctuations in oil prices. Additionally, political events in the UK can significantly impact GBP/CAD, increasing its risk profile.

AUD/JPY (Australian Dollar/Japanese Yen)
This pair represents the Australian dollar and Japanese yen exchange rate. Commodity prices influence the Australian Dollar, while the Japanese Yen is a safe-haven currency that tends to strengthen during periods of economic uncertainty. As a result, AUD/JPY can experience considerable volatility, making it a high-risk forex pair.

USD/RUB (US Dollar/Russian Ruble)
This forex pair denotes the exchange rate between the US Dollar and the Russian Ruble. Russia’s economy relies heavily on oil and gas exports, making its currency susceptible to fluctuations in energy prices. Political tensions and economic sanctions can also significantly impact the Russian Ruble, making the USD/RUB a risky forex pair.

Final Words
In conclusion, traders should be aware of the factors that influence the value of fiat currencies and consider these factors when opening short or long positions. This article introduces the ten most risky forex currency pairs, characterized by high volatility and susceptibility to various economic factors. Therefore, traders should take a more cautious approach when investing in these currency pairs.
 

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