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Best FX brokers to trade ZAR (South African Rand)
High Interest and Volatility trade with ZAR (South African Rand).
Here is everything you should know about ZAR pairs.
Basic knowledge on South Africa and ZAR
Improve your knowledge on ZAR (South African Rand).
Why you should trade and Where you can trade?
ZAR’s two main features are:
- High Swap Point
- High Volatility in market price
We have all the information you need here.
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1. South Africa is rich with Gold and Platinum
The country, South Africa comes with plenty of natural resources.
More than 20% of their GDP was made by the mining industry, but now they are also very active in Finance and Insurance industry.
Now that ‘BRICs’ has been changed to ‘BRICS’ as it includes Brazil, Russia, India, China and South Africa. The country has attracted attention of world’s investors as we are talking.
South Africa’s currency is ‘ZAR’ which stands for South African Rand (Zuid-Afrikaansche Republiek).
Currency pairs of ZAR are popular among online traders, and it is often promoted by brokers for its advantages.
2. ZAR has High Interest Rate
South African’s economy has grown with its natural resource.
But in recent years, workers take strike actions as they demand for better payment as compensation for oppressive and dangerous working environment.
Along with other economy development and declining oil prices, the salary average tends to go higher and it is one of the reasons of country’s inflation trend.
ZAR’s interest rate has been growing for years, and now it has reached to 6.5% in June, 2018.
ZAR’s interest rate, 6.5% is one of the highest in the world.
You can see the difference just by comparing the Swap Point of ZAR pairs and other major currency pairs.
By maintaining an open position of ZAR pairs, you can earn great amount as profit, or loss if you sell the currency.
It is even possible to stable earnings everyday if you plan your investment strategy carefully.
Where you can trade ZAR?
We have some popular FX Online Brokers which offer ZAR currency pairs on their trading platforms.
| Broker | Minimum Deposit | ZAR base currency | ZAR Currency Pairs | Leverage |
|---|---|---|---|---|
| CM Trading | $250 | Unavailable | USDZAR | 200:1 |
| XM | $5 | Available | USDZAR, EURZAR | 1:888 |
| Yadix | $100 | Unavailable | USDZAR, EURZAR, GBPZAR | 500:1 |
| HotForex | $5 | Unavailable | USDZAR, EURZAR, GBPZAR, ZARJPY | 1000:1 |
In many cases, transaction fees are free in FX, and in many cases the spread, which is the actual fee, is less than one cent, making it extremely low cost.
A trading method is to buy a currency with a relatively high interest rate against the the currency and hold it for a long time, aiming for profit by swap points.
When leverage is applied, the risk of price movements increases, but for example, when investing at 1 times leverage, the risk of price movements does not change with foreign currency deposits, and you can enjoy the advantage of low cost.
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How to follow ZAR market trend?
Not like before, but South Africa’s economy is still supported by its export of natural resources. Thus trade balance and other industry data easily affect the price of ZAR.
ZAR tends to go higher when international economy is stable. While risk-on mood, the currency price tends to go lower.
ZAR currency price is majorly affected by ‘Trade Balance’ and ‘Unemployment Rate’. If these economic data are changed extremely, ZAR will most likely react the same.
South Africa is also active in trading with China, thus slump on Chinese economy could affect negatively to ZAR.
South Africa’s financial deficit is very large in recent years, thus credibility problem in financial markets of the world could also affect negatively for ZAR.
3 Tips for trading South African Rand
Here we will give three points of trading South African Rand.
1. Beware of sudden changes in market prices
Be aware of the risks of emerging market currencies.
The volume of transactions is smaller than that of USD, JPY, EUR etc., and it may affect the liquidity of the entire market depending on the time of day.
Therefore, there is a risk that the market price will change greatly at once, so it is also important to make leverage as small as possible.
Never forget a stop loss order, even for long-term investments.
2. Pay attention to the situation of the Chinese economy
South Africa is one of the world’s largest resource countries alongside Australia.
China occupies an important position in the South African economy as its main export destination.
If exports to China decline due to the economic trends in China, the South African economy may be adversely affected and ZAR sells may intensify.
Therefore, it is important to focus not only to economic indicators in South Africa but also for trends in China.
3. Be aware of long-term investment
Emerging market currencies, where it is difficult to collect information such as changes in the economic situation, are not well suited for investment in stable profits from short-term transactions.
It is necessary to maintain a firm position and be aware that even if there is no profit from price movements, you will earn solid swap points.
If you keep the leverage low, you can cover the loss from the market price change with swap points.
However, there is no guarantee that a Lehman shock will occur in the future, and just because you have a long-term holding does not mean that you do not have to check the news.
It is important to stop once you feel it is dangerous.
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USD/JPY and ZAR/JPY to earn Swap Points
Australian dollars and NZ dollars were once popular, but interest rates are lower than US dollars, and they are less attractive as swap points.
In addition to the fact that the USDJPY earns interest rates, it is relatively easy to obtain information from the United States.
The point is that it is easy to detect when a situation occurs, and it is easy to make a choice such as closing the transaction.
In the case of FX, the cost is small, so if the situation calms down, you can resume trading.
South African Rand is one of the leading high interest rate emerging market currencies.
It is important to note that emerging market currencies are characterized by small trading volumes and rapid price movements, but the interest rate level of 6.75% is attractive.
The economy is more stable than the Turkish lira, which also has a high interest rate.
Mexican peso is also popular these days, but since it continues to be swayed by President Trump, it is hard to recommend it as an investment destination for beginners.
