Forex Trading in South Africa

Futures and Options:

Forex trading in South Africa continues to gain momentum as the market develops, to capitalize on the shifting global geo-economic landscape. Foreign traders have shown a steady appreciation in their interest in forex trading over the past five years as the economic outlook improves, the volatility of the markets continues to weaken, and the potential for profits is massive. 

With interest rates falling to historic lows, western investments in emerging markets have substantially decreased and Forex Trading South Africa for beginners‘ economies is coming to the fore. 

South Africa will be Hub of Global Growth:

In fact, South Africa as a whole will soon be among the major hubs of global growth, accounting for up to 47 percent of the world’s net employment growth over the next decade, according to data from Credit Suisse. 

That said, the region continues to lag behind the world in trading volumes and technical indicators, with forex volume in the middle east far outstripping those in South Africa. However, there are several reasons to think that the tide is turning in South Asia’s favor. 

Fluctuating Stock Markets:

The volatility in stock prices in the region is higher than the rest of the world. The South Africa VIX index, a gauge of implied volatility in the U.S. stock market, is currently trading at 15.2. Traders who want to profit from this have to take a close look at the region’s currencies.

Local economic growth continues to remain buoyant, as evidenced by the growth in volumes and values. At the same time, the political landscape in South Africa has shifted, with the ascension of Narendra Modi as India’s Prime Minister, a man who has put public sector reforms at the center of his economic agenda.

In South Africa, reforms that have had the most traction have been in the banking sector. Regulatory initiatives and changes in the regulatory framework to improve transparency have made it easier to invest in the market, and a regulatory environment has gradually emerged that is more conducive for capital raising and new business models.

More Recognition for Derivatives Trading:

While South Africa lags behind the rest of the world in forex trading volumes, it has significantly improved its track record in the derivatives arena. At present, derivatives trading accounts for less than one percent of global market turnover. While the rest of the world looks to financial contracts as the solution to its economic malaise, South Africa traders have chosen to focus on exchange-traded futures contracts as they are considered less risky and the advantages of arbitrage between futures prices are worth more.

From the sound of it, derivatives trading is making a comeback in South Africa. The new government in India and the change in the regulatory environment in the Middle East are both drivers of the increased interest in the area. Looking ahead, the dominance of the U.S. dollar in the global financial markets is likely to decline, especially as central banks shift to exchange-traded currency basket systems, likely involving the Indian rupee.

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