USD/ZAR appears to be one of the most exotic assets in the foreign exchange markets. It boasts extreme volatility – up to 2500 points a day! Such a mind-blowing feature makes it a dream for scalpers. However, to succeed in trading this currency pair, aside from good nerves, you can't do without a relatively large trading deposit. As for the main disadvantages of this asset, we can point to its high spread. However, its extreme volatility easily compensates it.
It's a direct quotation currency pair. Here the base currency is represented by the evergreen buck. The currency pair displays its value expressed in ZAR. The South African rand is volatile 24/7. So, you are free to trade this currency at any time you like. If you are eager to enjoy the highest volatility of this pair, stay in the market from 20:00 to 05:00 GMT.
As for the US economy, it's considered to be the largest in the world, with its 79% occupied by the trade and services sectors. The US industry sector holds 19%, while the rest is retained by agriculture. On the contrary, the proportion of the South African economy differs from the US one. Here industry occupies 30,3% of the economy. In particular, it includes the mining, manufacturing, and chemical sectors.
The country's agriculture occupies no more 2.4% of GDP. South Africa boasts well-developed crop production and a healthy livestock sector. Besides this, South Africa also happens to be a leading supplier of raw materials, including copper, gold, iron, and platinum. The key trading partners of this country are the United States, Japan, China, and the EU.
To successfully trade this currency pair, you should realize what has the most significant influence on the South African currency. The American economy is more diversified, while the latter is one of the most developed in Africa, although it's not impressive on a global scale.
ZAR can be defined as a commodity currency. So, it's very reliant on fluctuations in the raw materials market. When considerable changes in the value of metals mined in this country are observed, it's instantly reflected in the quotes of its currency.
The interest rates are crucial in both countries. You need to carefully watch the publication of new macroeconomic indicators of the two countries. Besides this, you should be aware of the trade balance between the USA and South Africa. Eventually, South African exports amount to over half of the country's GDP. Aside from that, you require keeping an eye open on the labor market. South Africa traditionally demonstrates high unemployment.
Monitor the situation in the diamond market since this country appears to be one of the key suppliers of this precious stuff. So, any changes in the value of this raw material can significantly affect the currency pair. Since it's an ultra-volatile asset, traditional trading approaches aren't practical.
If you stick with this currency pair, you should use a conservative approach to leverage because a steep bounce in price against your trading position can inflict considerable losses. Moreover, it's highly advisable to utilize a large trading deposit to be on the safe side. The rational approach to money management will help you to achieve excellent outcomes with this currency pair.
If you are a newcomer, you'd better stay away from this highly volatile currency pair. This asset is only for experienced investors. Newbies would better opt for less volatile and more liquid assets.