Live rand dollar exchange rate: the market exchange rate of USD/ZAR

The USD/ZAR is an exotic forex pair which offers daily opportunities for traders who favor emerging markets with a healthy dose of volatility. While the South African rand (ZAR) has been in a major slump recently, forex traders can still profit by buying USD/ZAR CFDs and taking advantage of the market’s decline.

Live rand dollar exchange rate: the market exchange rate of USD/ZAR

The USD/ZAR forex quote on a trading platform shows us the live rand – dollar exchange rate. Simply put, the exchange rate informs us of how many rand (ZAR) we can exchange for one US dollar (USD) and vice versa. At the time of writing, the USD/ZAR quotation is at 14.37 and for someone that wants to exchange his rand into dollars, this means he would need at least 14.37 rand to get 1 dollar – as such, we can see that the dollar holds much more value.

2019 hasn’t been a good year for the South African economy and therefore the rand has been weakening considerably – especially when compared to the world’s most valuable currency, the USD.

In fact, even though currencies of emerging markets have reported some gains with the beginning of the new decade, 2020 has still found the ZAR on the decline. The geopolitical turmoil between US and China as well as the Middle East has started to die down but while the rest of the market is on the rebound, the ZAR has failed to make any noticeable progress on the charts.

South Africa is considered a major manufacturing hub in the region and one of the most diversified economies in the African continent – coming second only to that of Nigeria. However, it’s important to note that the economy of South Africa relies on exports of coal, diamonds, gold and other precious metals and therefore the commodity markets are the best indicator of its performance on the world stage.

 

Trading the USD/ZAR pair

Forex traders who are interested in trading the USD/ZAR pair need to keep watch for any events that may affect the commodity markets as even the US dollar is highly sensitive to developments in commodities as well.

As the exchange rate between the two currencies moves up and down, forex traders can speculate and profit from its future movements. This is done with the help of CFDs or Contracts for Difference which allow traders to buy or even sell USD/ZAR units. In short, if the rate of USD/ZAR goes up, you just need to open a buy position on your platform and while the price keeps increasing, you will gain profits depending on the amount you invested.

The great benefit of CFDs, however, stems from the fact that this is also possible even if the exchange rate is going down. With CFD trading, an investor doesn’t need to own a currency in order to sell since it’s merely a form of a speculation. Instead, you can open a sell position and if the exchange rate keeps declining, you will still benefit with gains according the amount invested.

The USD/ZAR quote, however, measures the amount of rand (ZAR) you can buy with 1 dollar (USD) and therefore, the exchange rate will rise when the ZAR loses value. Consequently, if you are trading the USD/ZAR pair and you believe the South African economy will not be performing well, you should open a buy position. This is because more rand will be needed to buy 1 dollar and therefore the exchange rate will go up.

In the case of other pairs such as the EUR/USD, you would instead need to open a sell position if the EUR was losing value against the dollar and only buy if the EUR was performing better.

 

Leverage

Investors that are interested in the live rand dollar exchange rate and want to trade the USD/ZAR pair can open an account with a trustworthy forex broker. A broker acts as an intermediary between you and the forex market, providing you with the live prices and facilitating your trades.

One of the benefits of trading with a forex broker is the use of leverage. Leverage can be considered as a way to increase the size of a position you can control many times over. Using leverage is an effective tool to magnify your profits and is the main reason why forex trading is so lucrative.

However, it’s also important to note that leverage also increases your exposure to risk and if used excessively without taking precautions, you could lose your investment in mere minutes. This is particularly true for markets with an exceedingly volatile exchange rate.

If you are interested in learning more about trading the USD/ZAR pair and how leverage can be used effectively while minimizing excess risk, you can sign up for a free forex account with CM Trading and getting in touch with your personal trading specialist.

Register today and discover the opportunities of trading forex with the largest and best-performing broker in Africa!

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