The Rand Rollercoaster And Cfd Trading
CFD Trading allows the trader to take advantage of changing markets
. Rand currency movements are of particular interest to South African traders as these movements can formulate a wider connection with the global economy and offer a valuable insight into the South African export industry and bond market space.Regardless of whether or not you have been involved in CFD trading or CFD dealing, if you have ever travelled abroad or purchased from a foreign site online you have engaged in some form of foreign exchange trading. By using the value of your home currency, in this case the South African rand against an alternate currency - you cannot help but take part in forex trading. If the value of your currency is particularly low this may be a devalued opportunity however if it is unexpectedly high - there is potential for profit.
The foreign exchange market is the biggest financial market in the world with trillions of dollars traded daily and the key to tapping into this financial market relies on a philosophy of understanding just how connected the world really is. Lately the rand has experienced a rollercoaster of peaks and troughs when paired with the US dollar, these variants can be explored using the financial context across this period.
The rand offers a unique outlet for investors seeking to engage with emerging countries. Economists have noted that investors looking for greater growth may be likely to move away from low yielding assets in economically prosperous nations and into the more lucrative opportunities presented by the developing world.
The term assigned of 'developing' is very broad and open to analysis when applied to the microcosms within South Africa however what it does do is offer an alternate option when economies not belonging to this category are in a state of fluctuation. These fluctuations in the form of G20 negotiations and the second US quantitative easing initiative have to an extent, steered investor's interests towards the rand, resulting in the rand rising in value.
This enthusiasm is also met with risk limitation; investor concerns as a result of the Irish debt crisis and Euro zone fragility withdrew investor's appetite for risk and as a consequence may have led investors to turn to the more historically stable dollar not the rand, reducing the value of the currency.
South Africa certainly doesn't want an uncontrollably valuable rand nor does it want a rand which fails to compete in the forex markets. Steady is the ideal balance sought by South Africa in order to retain the use of exports and a feasible South African bond market. The South African Central bank has cautiously purchased $500 million of reserves in August 2010 as part of steps to assure this steadiness and to maintain a level of control on the currency markets.
The latest news impacting the world's financial markets and useful CFD education resources are available at IG Markets. CFD Trading involves significant risk of loss. Please ensure that you understand all risks prior to investing.
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