What Is An Emerging Market Currency?

An emerging market currency is the money of a country that is in the process of economic
progress backed by its emerging national market. These types of economies experience an
extended period of robust growth in the industrial production sector and the expansion of
their economy as a whole. This internal growth is a consequence of the development of
infrastructure and technology. As a result, substantial levels of foreign capital investment
are often attracted because these currencies typically exhibit increased volatility and
dramatic exchange rate fluctuation. However, risk in such markets can be great, and
numerous external factors can contribute to wild swings in exchange rate pricing.

Currently, five nations are considered world leaders in the emerging market currency
category and they are known as ‘BRICS’: Brazil, Russia, India, China and South Africa.

Brazil Real (BRL)

The BRL is the 19th most frequently traded currency in terms of daily forex market turnover,
with an estimated value of US$51 billion. Brazil's rise to global economic prominence is
largely due to a strong exports sector. Earning a global rank of 25th, and valued at
US$190.1 billion annually,[4] the country relies heavily upon key exports of iron ore,
soybeans, coffee and automobiles.

Russian Ruble (RUB)

The ruble is one of the leading emerging market currencies in the world. Tied with the Indian
rupee as the 18th most frequently traded currency on the forex market, the ruble has an
average daily turnover measured at US$58 billion. The ruble is known for its unpredictable
nature, earning it the title of world's most volatile currency. The ruble's correlation to crude
oil pricing coupled with the impact of economic sanctions imposed by the U.S. and EU often
lead to dramatic swings in value.

Indian Rupee (INR)

The rupee is tied with the Russian ruble as the 18th most frequently traded currency in terms
of forex turnover, valued at US$58 billion daily .With a population of close to 1.4 billion, India
competes with China on having the highest population in the world. India’s has the fourth-
largest economy in the world and it’s growing fast.
Chinese Yuan (CNY)

The Chinese yuan is the eighth most frequently traded currency in the world, boasting an
average daily forex turnover of US$202 billion. The yuan is involved in 4% of total daily forex
volume. The yuan is a rare emerging market currency in that it plays a substantial role in the
foreign exchange market as a whole. Easily the currency leader of the BRIC nations.

South Africa (ZAR)

South Africa’s economy has struggled to achieve consistent growth amidst corruption
scandals and rent-seeking from state owned enterprises. The USD/ZAR (US Dollar/ South
African Rand) has been one of the most volatile emerging market currencies.

EMERGING CURRENCIES TRADING TIPS

Tips to trade emerging market currencies include:

 Emerging market currencies display more currency volatility than major pairs, it is
important to determine the appropriate position size for the trade.
 If you’re new to trading emerging then analyze the fundamentals and technical until
you are comfortable with the pair.
 Low amounts of leverage or even no leverage at all, is key to trading emerging
market currencies
 If you are new to forex see our Forex for Beginners guides and tips to build
confidence in trading.
 Keep an eye on the latest forex news and analysis to make informed trading
decisions based on the daily movements of emerging market currency pairs.