Forex (FX) trading involves exchanging one currency for another, speculating on exchange rate movements.
Asian Currency Pairs
The most actively traded Asian pairs:
| Pair | Daily Volume | Characteristics |
| USD/JPY | ~$900B | Most liquid Asian pair, carry trade favorite |
| USD/CNY | ~$250B | Managed float, PBOC intervention |
| USD/KRW | ~$80B | Sensitive to semiconductor cycle |
| USD/INR | ~$60B | RBI actively manages |
What Drives Asian Forex
- Central bank policy (BOJ, PBOC, RBI decisions)
- Trade flows (exports vs imports)
- US Dollar strength (affects all Asian currencies)
- Risk sentiment (risk-off = yen strengthens)
The Yen Carry Trade
Borrow in low-rate yen → invest in higher-rate currencies → profit from rate differential. This is one of the most famous forex strategies and directly impacts Asian markets.