While everybody is focusing on Europe and Asia when it comes to Forex, Africa is growing strong, being ready to become one of the biggest markets.
Over the past months, especially, with the spread of the coronavirus on a global scale, the Forex Market registered an impressive surge on the continent, as more and more traders joined the environment.
It can be said that the reasons why this growth in popularity was possible in Africa are quite a lot, but we did manage to identify a few of the most important, able to make the market become even bigger!
Forex market remains the largest market, no matter what
Sure, in Africa, like in many other regions, there are quite a few financial markets investors could be attracted to. Still, while each of these markets has its own fans, the Forex Market will remain the largest for a very long time.
Just to bring in a few numbers, the trading transactions reached values of $5 trillion, on a daily basis. And as a side note, none of the other markets can reach this number, as currencies need to be constantly exchanged to conduct foreign business!
Lower transaction costs and increased liquidity
Considering the increased number of transactions that occur, the Forex Market is very liquid. Therefore, this means that transactions can be executed at increased speeds, thus resulting in lower transaction costs.
In contrast, if the Forex Market would be less liquid, the opposite will happen. However, traders in Africa are now taking advantage of all these lowered transaction costs and start trading Forex, which opens for more positions and allows them to have bigger gains.
Currencies show the first signs of strengthening
Yes, COVID-19 seriously affected a lot of businesses, as well as the Forex Market. But despite this, there are quite a lot of factors, including political and economic conditions, able to alter the prices of currencies, whether we’re talking about them going upwards or downwards.
Africa, like most continents, was also affected, with a lot of currencies registered a weakened state against top currencies, like the United States Dollar. But we can observe a slow and somehow phased reopening of multiple economies, while businesses are also opening their doors, all this leading to the growth of some currencies, against the global ‘top players’.
Of course, the list of reasons why Forex is booming in Africa can continue, but we believe we have covered three of the most important factors. What are your thoughts on how things are going on this continent? Let us know your thoughts, by sharing a few words in the comments section below!
