We can define it as a direct quotation currency pair. Here the evergreen buck acts as the base asset. The currency pair shows the greenback’s value denominated in ZAR. The currency pair is volatile round the clock so that you can trade it at any time.
To make the most of this pair, you’d better open your chart from 20:00 to 05:00 GMT – the period of its maximum activity.
The American economy is the world leader in terms of size. The services and trade sectors form 80% of its GDP. Up to 19% is allocated to the industry sector, and the rest is occupied by agriculture. Indeed, the South African economy demonstrates a different proportion. In this case, 30.3% is allocated to industry, including manufacturing, mining as well as chemical sectors.
2.4% of South Africa’s GDP is formed by agriculture, mainly known for its sturdy livestock sector and well-developed crop production. Moreover, this country is also the number one supplier of raw materials, in particular, platinum, iron, gold, and copper. China, Japan, and the United States appear to be the major trade partners of this country.
To succeed in trading this asset, you need to pay attention to what greatly influences the South African rand. However, on a global scale, it’s not visible.
It’s a pure commodity currency because it heavily depends on the raw materials market. When significant fluctuations in the value of metals mined in this African country are seen, the currency pair instantly reacts.
The interest rates of the two countries also matter for the pair. You should keep an eye on the release of new macroeconomic indicators of the two nations.
Furthermore, you require monitoring the trade balance of South Africa and the United States. South African exports account for more than half of the country’s GDP. Moreover, you need to carefully watch the labor market especially considering that South Africa is known for its high unemployment.
You should also monitor the diamond market because this country is one of the major suppliers of this precious stuff. Any fluctuations in the value of this raw material can significantly impact the asset.
Conventional trading techniques don’t work here because it’s an extremely volatile asset. So, if you have decided to trade this currency pair, stick with a conservative approach to leverage. Otherwise, a wild jump in price against your trading position will eat up a massive portion of your deposit. That’s the reason why we mentioned the necessity of having a large deposit above. Don’t forget about the principles of money management to stay on the safe side.
If you are a novice trader, we recommend you not to trade this highly volatile asset. Only experienced traders have more chances to succeed in trading this pair. Newcomers would better shift to more liquid and less volatile assets.