The global forex market is booming and Africa has seen a significant increase in traders and brokers in the last few months.
Since the COVID-19 outbreak with the resulting government-enforced lockdowns around the globe, economies have weakened and several businesses have suffered, sending the unemployment rate across the globe skyrocketing.
The unemployment rate across Africa soared, with numbers increasing to more than 30% in South Africa and 23% in Nigeria, changing the fortunes of forex trading in Africa as many people had to scout for new opportunities to provide for their families.
As it happens, South Africa and Nigeria are also Africa’s two largest economies, and the increasing number of forex traders in these two countries alone has impacted the forex markets greatly.
Even the employed are exploring new means of additional income. The forex market is easily accessible and more than $5 trillion is traded each day.
The market is open 24 hours a day, 5 days a week and all a potential trader needs is an internet connection and a smart device, laptop or PC, making forex trading an ideal way to earn money from anywhere in the world.
A strong rivalry among different brokers and the need to offer better trading conditions than the next broker is another reason trading has increased recently in Africa.
Africa’s youth is eager to learn, technology is advancing, costs and fees are decreasing and more financial instruments such as CFDs, commodities, stocks and indices are being offered to cater to the needs of all traders across the African continent.
The fact that Africa’s currencies are starting to perform better and the economy is stabilizing also has a great effect on forex markets. The South African Rand is one of the most traded currencies in the world and is steadily getting stronger.
African forex brokers offer a very high leverage, which can maximize profits when understood and used correctly.
In 2018 new restriction laws were put in place by the European Securities and Markets Authority (ESMA). These restrictions handicap traders in terms of their profit potential, which has prompted them to move to the greener pastures of the African markets.
The FSCA of South Africa allows for unlimited leverage ratios, and while the organisation is not as strict as many other regulators, it has taken steps to enforce client protection measures which mitigate the risks of trading on higher leverage.
Improvement should soon be visible for other African countries such as Nigeria, which will result in Africa’s forex numbers increasing even more.
As most of the African countries are still in the process of forming regulations with regards to forex trading, potential investors are advised to only select brokers that are regulated and in compliance with financial institutions.
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Editors’ Picks
EUR/USD: Bulls pray for a dovish Fed
EUR/USD has finally taken a breather after a pretty energetic climb. The pair broke above 1.1680 in the second half of the week, reaching its highest levels in around two months before running into some selling pressure. Even so, it has gained almost two cents from the late-November dip just below 1.1500 the figure.
GBP/USD trims gains, recedes toward 1.3320
GBP/USD is struggling to keep its daily advance, coming under fresh pressure and retreating to the 1.3320 zone following a mild bullish attempt in the Greenback. Even though US consumer sentiment surprised to the upside, the US Dollar isn’t getting much love, as traders are far more interested in what the Fed will say next week.
Japanese Yen refreshes three-week high vs USD; seems poised to appreciate further
The Japanese Yen retains bullish bias as BoJ rate hike bets offset dismal Household Spending data. Dovish Fed expectations fail to assist the USD in attracting buyers and keep a lid on the USD/JPY pair. Traders keenly await the US PCE Price Index for Fed rate-cut cues and a fresh directional impetus.
Editors’ Picks
AUD/USD Price Forecast: Revisits two-month high near 0.6620
AUD/USD rises to near 0.6620 due to continued outperformance from the Australian Dollar. RBA’s Bullock keeps the option of further monetary policy tightening on the table. Investors seem confident that the Fed will reduce interest rates next week.
Japanese Yen refreshes three-week high vs USD; seems poised to appreciate further
The Japanese Yen retains bullish bias as BoJ rate hike bets offset dismal Household Spending data. Dovish Fed expectations fail to assist the USD in attracting buyers and keep a lid on the USD/JPY pair. Traders keenly await the US PCE Price Index for Fed rate-cut cues and a fresh directional impetus.
Gold: Bullish momentum fades despite broad USD weakness
After rising more than 3.5% in the previous week, Gold has entered a consolidation phase and fluctuated at around $4,200. The Federal Reserve’s interest rate decision and revised Summary of Economic Projections, also known as the dot plot, could trigger the next directional move in XAU/USD.
Week ahead: Rate cut or market shock? The Fed decides
Fed rate cut widely expected; dot plot and overall meeting rhetoric also matter. Risk appetite is supported by Fed rate cut expectations; cryptos show signs of life. RBA, BoC and SNB also meet; chances of surprises are relatively low. Dollar weakness could linger; both the aussie and the yen best positioned to gain further. Gold and oil eye Ukraine-Russia developments; a peace deal remains elusive.
Week ahead – Rate cut or market shock? The Fed decides
Fed rate cut widely expected; dot plot and overall meeting rhetoric also matter. Risk appetite is supported by Fed rate cut expectations; cryptos show signs of life. RBA, BoC and SNB also meet; chances of surprises are relatively low.
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