Compare popular high-yield currency pairs! Is trading USD/MXN worth aiming for? [Relaxed Forex]
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Relaxed Currency. Individual investor. A “Relaxed Trading” school with a very small number of trades. Studying every day aiming to achieve great success in FX. Holds accounts with various FX brokers and is familiar with a variety of services in the industry.
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*This article is a reprint and revision of an article from FX Strategy.com August 2019 issue. Please note that the market information written in the text may differ from the current market.
When retail FX began in Japan, the high-interest currency pair of emerging markets was the South African rand/yen. Later, Turkish lira/yen became tradable, and now more FX brokers offer Mexican peso/yen. Here, we compare these three currency pairs from various angles.
Comparison by Price Movement Magnitude
First, compare the daily price movement magnitudes of the three currency pairs. Since volatility analysis can be hard to visualize, we prioritize clarity and use the average of “difference between daily high and low” as a proxy.
Table ① shows the average range between high and low and the average movement in percent relative to the open price. The measurement period is from the beginning of 2018 to the end of April 2019.
From this, you can see that the Turkish lira/yen has the largest movement. It moved as much as 0.51 yen per day. Compared with that, the Mexican peso/yen moved only 0.08 yen, which might seem uninteresting. However, this is due to the different exchange rate levels. The Turkish lira/yen fluctuates in the range of about 20 to slightly under 30 yen. On the other hand, the Mexican peso/yen fluctuates under 10 yen. If the price difference is two to three times or more, it is not surprising if daily movement differs by many times.
Therefore, let’s compare by the magnitude of movement relative to the exchange rate level. The Turkish lira/yen shows 2.4% and the Mexican peso/yen 1.3%. The gap is still large but has tightened considerably. Nevertheless, the Turkish lira/yen remains overwhelmingly larger.
