ZAR/ | USD/ZAR | USD/ZAR exchange rate | USD/ZAR price | Trade USD/ZAR | IG ZA

However, the South African Rand accounts for over 1. One of the main reasons for these high volumes outside the country was due to the forex trading restrictions applied to South African residents. The average fluctuation in the South African Rand is about pips, making it a very attractive exotic currency to trade.

The USD is the base currency and the ZAR is the quote currency, meaning that prices are quoted in South African Rand to 1 US Dollar.

For example if you see a USDZAR price of The most interesting aspect of the USDZAR currency rate is the fact that it represents two very different economies. While the US Dollar represents the world's biggest economy and also the world's reserve currency, the South African Rand on the other hand represents an emerging market economy and the second largest economy in Africa.

One of the traits of an emerging economy is the fact that when the US monetary policy is loose or accommodative, the search for yield often results in institutional money flowing to emerging market economies where the returns are much higher via interest rates albeit at some risks.

Therefore, the US Dollar often tends to fall in value against the South African Rand during times when the monetary policies of both the countries are starkly diverging. The institutional money however tends to flow back to the US during periods of tighter monetary policy as the search for higher yield often results in the institutional money flowing back to the safe haven of US bonds. The South African economy has a significant exposure in the commodity markets in terms of mining of various minerals and metals.

These commodities are eventually traded in the US Dollar and tend to rise and fall as the supply demand dynamics tend to shift and also the value of the US Dollar.

Traders need to keep an eye on the export sector, especially the mining sector in the South African economy as it generally employs a large workforce and thus any shifts in the balance could clearly foretell incoming economic shifts in the larger perspective. Pay particular attention to Platinum, Gold, Diamonds and Coal which form the majority of exports from the country. Any political turbulance often tends to significantly devalue the currency against the US Dollar and the same goes with the economic indicators as well.

Of particular importance is the jobs market, a number that is closely watched by currency traders. Other important economic indicators include inflation and GDP. At the same time, the US economic indicators are also equally important as they tend to play a role in the strength or weakness of the US Dollar.

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The points above are some of the most important aspects that affect the exchange rate of the USD and the South African Rand. As a trader, the USDZAR no doubt offers quite a lot of trading opportunities, largely thanks to the volatility seen in this currency pair. Traders should however bear in mind that the currency pair is volatile and improper money management could result in significant losses either due to a sudden surge in volatility or wider spreads during off market hours.

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