Currencies managed to perform quite admirably amid a global pandemic, but that doesn’t really say much. Performing “well” in a time of crisis usually means slightly smaller losses or no losses at all. In the case of many exotic currencies, the losses have been catastrophic, but nothing compared to the stocks and overall value of the economy.

Unfortunately though, as many were predicting that exotic currencies would be the primary target of speculators post-pandemic, there is very little to support that. It is believed that a second wave of the virus is looming over us as the world braces for Autumn (a typically more dangerous time of the year). Seeing the disarray that exotic currencies found themselves in, it is highly unlikely that large traders will risk pouring resources in a very small chance of recovery.

An example of the exotic currency market

There are quite a lot of examples of exotic currencies going under during the pandemic, but none have taken a hit harder than the Nigerian Naira in many experts’ opinions. Simply taking a look at the chart is already evidence enough that the country has suffered a complete disaster not only through the actual devaluation of the economy but rows and rows of speculation from foreign investors that were holding on to vast swathes of the Nigerian currency.

According to one of the best FX broker in Nigeria, the currency has suffered a nearly 6% drop within the last few months alone. The chart clearly shows that the confidence in the Naira dropped in March of 2020, the moment where the world started to seriously consider a complete halt of the economy.

The currency may be regaining a bit now, but the struggle to stay on a sustained growth pattern clearly shows that there is not enough confidence to give the currency the kick it needs.

This is the case for almost all of the exotic currencies as well.

Stability of major currencies is more important

According to experts from 55brokers, no matter how distraught the market may be, the stability of major currencies such as the USD and the EUR is at the top of the world’s agenda right now. Very few foreign investors are concerned with their holdings of exotic currencies, focusing more on buying as much USD or EUR as they possibly can.

This helps with the concentration of monetary power in only a couple of currencies, thus making a safe haven out of them. But, of course, this kind of strategy could leave other currencies almost barren.

When will there be relief?

Now that we’re done with the bad news, let’s see what the good news is. Every investor knows that no matter how hard currency may fall, it is extremely unlikely to remain that way if there is some interest from outside the country.

The Nigerian Naira that we talked about in this example is yet again a perfect example. Being the economic powerhouse of the African continent, Nigeria can most definitely expect a kickback in exchange rates once the storm has passed. However, other exotic currencies in the region may not have such relief.

This “good news” is a bit more bittersweet than one-sided. Sure there will be a re-distribution of attention for slightly larger exotic currencies after the pandemic, but smaller ones are less likely to get an immediate bump once the economy gets restarted.