South Africa, the most significant retail forex player in Africa, has experienced a surge in forex trading. There are several reasons why forex trading in SA is exploding. This article looks at some of the reasons behind the growing popularity, and the opportunities and risks associated with it.
Let’s visit some interesting statistics before going any further. As of August 2022, South Africa has around 190,000 daily forex traders and more than 1,000 financial organisations taking part in the industry. The country, which sits on the southern tip of the African continent, saw its forex trading volumes generate $2.21 billion (R42.2 billion) per day.
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What’s Causing the Popularity of Forex Trading in SA?
Forex trading in SA has become more prominent because of the following reasons:
Additional Source of Incoming
The economic environment has been getting tougher over the past few years. South Africa’s food inflation surged to a 17-year high in March 2023. As a result, South Africa’s Reserve Bank has been forced to raise rates to tame inflation, and for its part, the central bank can argue that this has been the global trend since the coronavirus pandemic.
Residents on the ground have turned to forex trading as an extra stream of income to cushion the economic crunch.
In Q1 2023, South Africa’s unemployment rate stood at 32.9%, one of the highest in the world. This has driven the interest in forex trading.
The allure of being your boss and potentially earning a substantial income from trading has enticed those seeking alternative career paths. Forex trading offers a flexible option for those struggling to find traditional employment.
Many South Africans have found success in forex trading, and their stories serve as a source of inspiration for newcomers. These success stories highlight the potential for substantial profits and financial independence that forex trading can offer.
Unfortunately, the success stories have been used as a vehicle to con unsuspecting people. Self-styled forex gurus make up success stories to lure people and swindle them of their hard-earned cash. In July 2022, a car dealer exposed a forex trader who lied about purchasing a luxury Mercedes-Benz G-class SUV.
While these scam stories serve as cautionary tales, there are real success stories of South African forex traders who generated modest profits from trading.
Conducive Regulatory Environment
South Africa’s regulatory environment for forex trading has been welcoming to traders. With the Financial Sector Conduct Authority (FSCA) overseeing the industry, traders can have confidence in the integrity and security of their investments.
This conducive regulatory framework has contributed to the growth of the forex market in the country.
Internet and Mobile Device Penetration
The increasing availability of the internet and the widespread use of smartphones have played a pivotal role in the popularity of forex trading in South Africa. These technological advancements have made it easier for individuals to access trading platforms and information about forex markets.
In Summary: The Rise of Forex Trading in SA
The rising popularity of forex trading in SA can be attributed to its appeal as an additional source of income, the challenges posed by unemployment, inspiring success stories, advancement in consumer tech, a conducive regulatory environment and the liquidity of the market.