Pakistan Forex


The foreign exchange market (Currency, Forex, or FX) market is where currency trading takes place. It is where banks and other official institutions facilitate the buying and selling of foreign currencies. [1]FX transactions typically involve one party purchasing a quantity of one currency in exchange for paying a quantity of another. The foreign exchange market that we see today started evolving during the 1970s when worldover countries gradually switched to floating exchange rate from their erstwhile exchange rate regime, which remained fixed as per the Bretton Woods system till 1971.
Today, the FX market is one of the largest and most liquid financial markets in the world, and includes trading between large banks, central banks, currency speculators, corporations, governments, and other institutions. The average daily volume in the global foreign exchange and related markets is continuously growing. Traditional daily turnover was reported to be over US$3.2 trillion in April 2007 by the Bank for International Settlements.[2] Since then, the market has continued to grow. According to Euromoney's annual FX Poll, volumes grew a further 41% between 2007 and 2008.[3]
The purpose of FX market is to facilitate trade and investment. The need for a foreign exchange market arises because of the presence of multifarious international currencies such as US Dollar, Pound Sterling, etc., and the need for trading in such currencies.

India Forex


Foreign exchange trading increased by 38% between April 2005 and April 2006 and has more than doubled since 2001. This is largely due to the growing importance of foreign exchange as an asset class and an increase in fund management assets, particularly of hedge funds and pension funds. The diverse selection of execution venues such as retail trading platforms platforms offered by companies such as ParagonEX, First Prudential Markets and Saxo Bank have made it easier for retail traders to trade in the foreign exchange market. In 2006, retail traders constituted over 2% of the whole FX market volumes with an average daily trade volume of over US$50-60 billion (see retail trading platforms).[5] Because foreign exchange is an OTC market where brokers/dealers negotiate directly with one another, there is no central exchange or clearing house. The biggest geographic trading centre is the UK, primarily London, which according to IFSL estimates has increased its share of global turnover in traditional transactions from 31.3% in April 2004 to 34.1% in April 2007. The ten most active traders account for almost 80% of trading volume, according to the 2008 Euromoney FX survey.[3] These large international banks continually provide the market with both bid (buy) and ask (sell) prices. The bid/ask spread is the difference between the price at which a bank or market maker will sell ("ask", or "offer") and the price at which a market-maker will buy ("bid") from a wholesale customer. This spread is minimal for actively traded pairs of currencies, usually 0–3 pips. For example, the bid/ask quote of EUR/USD might be 1.2200/1.2203 on a retail broker. Minimum trading size for most deals is usually 100,000 units of base currency, which is a standard "lot".

South Korea Forex


The foreign exchange market (Currency, Forex, or FX) market is where currency trading takes place. It is where banks and other official institutions facilitate the buying and selling of foreign currencies. [1]FX transactions typically involve one party purchasing a quantity of one currency in exchange for paying a quantity of another. The foreign exchange market that we see today started evolving during the 1970s when worldover countries gradually switched to floating exchange rate from their erstwhile exchange rate regime, which remained fixed as per the Bretton Woods system till 1971.
Today, the FX market is one of the largest and most liquid financial markets in the world, and includes trading between large banks, central banks, currency speculators, corporations, governments, and other institutions. The average daily volume in the global foreign exchange and related markets is continuously growing. Traditional daily turnover was reported to be over US$3.2 trillion in April 2007 by the Bank for International Settlements.[2] Since then, the market has continued to grow. According to Euromoney's annual FX Poll, volumes grew a further 41% between 2007 and 2008.[3]
The purpose of FX market is to facilitate trade and investment. The need for a foreign exchange market arises because of the presence of multifarious international currencies such as US Dollar, Pound Sterling, etc., and the need for trading in such currencies.

[edit] Market size and liquidity
The foreign exchange market is unique because of
its trading volumes,
the extreme liquidity of the market,
its geographical dispersion,
its long trading hours: 24 hours a day except on weekends (from 22:00 UTC on Sunday until 22:00 UTC Friday),
the variety of factors that affect exchange rates.
the low margins of profit compared with other markets of fixed income (but profits can be high due to very large trading volumes)
the use of leverage

Main foreign exchange market turnover, 1988 - 2007, measured in billions of USD.
As such, it has been referred to as the market closest to the ideal perfect competition, notwithstanding market manipulation by central banks. According to the Bank for International Settlements,[2] average daily turnover in global foreign exchange markets is estimated at $3.98 trillion. Trading in the world's main financial markets accounted for $3.21 trillion of this. This approximately $3.21 trillion in main foreign exchange market turnover was broken down as follows:
$1.005 trillion in spot transactions
$362 billion in outright forwards
$1.714 trillion in foreign exchange swaps
$129 billion estimated gaps in reporting
Of the $3.98 trillion daily global turnover, trading in London accounted for around $1.36 trillion, or 34.1% of the total, making London by far the global center for foreign exchange. In second and third places respectively, trading in New York accounted for 16.6%, and Tokyo accounted for 6.0%. In addition to "traditional" turnover, $2.1 trillion was traded in derivatives. Exchange-traded FX futures contracts were introduced in 1972 at the Chicago Mercantile Exchange and are actively traded relative to most other futures contracts. Several other developed countries also permit the trading of FX derivative products (like currency futures and options on currency futures) on their exchanges. All these developed countries already have fully convertible capital accounts. Most emerging countries do not permit FX derivative products on their exchanges in view of prevalent controls on the capital accounts. However, a few select emerging countries (e.g., Korea, South Africa, India—[1]; [2]) have already successfully experimented with the currency futures exchanges, despite having some controls on the capital account. FX futures volume has grown rapidly in recent years, and accounts for about 7% of the total foreign exchange market volume, according to The Wall Street Journal Europe (5/5/06, p. 20).
Top 10 currency traders [4]% of overall volume, May 2008
Rank
Name
Volume
1
Deutsche Bank
21.70%
2
UBS AG
15.80%
3
Barclays Capital
9.12%
4
Citi
7.49%
5
Royal Bank of Scotland
7.30%
6
JPMorgan
4.19%
7
HSBC
4.10%
8
Lehman Brothers
3.58%
9
Goldman Sachs
3.47%
10
Morgan Stanley
2.86%
Foreign exchange trading increased by 38% between April 2005 and April 2006 and has more than doubled since 2001. This is largely due to the growing importance of foreign exchange as an asset class and an increase in fund management assets, particularly of hedge funds and pension funds. The diverse selection of execution venues such as retail trading platforms platforms offered by companies such as ParagonEX, First Prudential Markets and Saxo Bank have made it easier for retail traders to trade in the foreign exchange market. In 2006, retail traders constituted over 2% of the whole FX market volumes with an average daily trade volume of over US$50-60 billion (see retail trading platforms).[5] Because foreign exchange is an OTC market where brokers/dealers negotiate directly with one another, there is no central exchange or clearing house. The biggest geographic trading centre is the UK, primarily London, which according to IFSL estimates has increased its share of global turnover in traditional transactions from 31.3% in April 2004 to 34.1% in April 2007. The ten most active traders account for almost 80% of trading volume, according to the 2008 Euromoney FX survey.[3] These large international banks continually provide the market with both bid (buy) and ask (sell) prices. The bid/ask spread is the difference between the price at which a bank or market maker will sell ("ask", or "offer") and the price at which a market-maker will buy ("bid") from a wholesale customer. This spread is minimal for actively traded pairs of currencies, usually 0–3 pips. For example, the bid/ask quote of EUR/USD might be 1.2200/1.2203 on a retail broker. Minimum trading size for most deals is usually 100,000 units of base currency, which is a standard "lot".
These spreads might not apply to retail customers at banks, which will routinely mark up the difference to say 1.2100/1.2300 for transfers, or say 1.2000/1.2400 for banknotes or travelers' checks. Spot prices at market makers vary, but on EUR/USD are usually no more than 3 pips wide (i.e., 0.0003). Competition is greatly increased with larger transactions, and pip spreads shrink on the major pairs to as little as 1 to 2 pips.

[edit] Market participants
Financial markets
Bond marketFixed incomeCorporate bondGovernment bondMunicipal bondBond valuationHigh-yield debt
Stock marketStockPreferred stockCommon stockRegistered shareVoting shareStock exchange
Foreign exchange market
Derivatives marketCredit derivativeHybrid securityOptionsFuturesForwardsSwaps
Other MarketsCommodity marketMoney marketOTC marketReal estate marketSpot market
Finance seriesFinancial marketFinancial market participantsCorporate financePersonal financePublic financeBanks and BankingFinancial regulation
vde
Unlike a stock market, where all participants have access to the same prices, the foreign exchange market is divided into levels of access. At the top is the inter-bank market, which is made up of the largest investment banking firms. Within the inter-bank market, spreads, which are the difference between the bid and ask prices, are razor sharp and usually unavailable, and not known to players outside the inner circle. The difference between the bid and ask prices widens (from 0-1 pip to 1-2 pips for some currencies such as the EUR). This is due to volume. If a trader can guarantee large numbers of transactions for large amounts, they can demand a smaller difference between the bid and ask price, which is referred to as a better spread. The levels of access that make up the foreign exchange market are determined by the size of the “line” (the amount of money with which they are trading). The top-tier inter-bank market accounts for 53% of all transactions. After that there are usually smaller investment banks, followed by large multi-national corporations (which need to hedge risk and pay employees in different countries), large hedge funds, and even some of the retail FX-metal market makers. According to Galati and Melvin, “Pension funds, insurance companies, mutual funds, and other institutional investors have played an increasingly important role in financial markets in general, and in FX markets in particular, since the early 2000s.” (2004) In addition, he notes, “Hedge funds have grown markedly over the 2001–2004 period in terms of both number and overall size” Central banks also participate in the foreign exchange market to align currencies to their economic needs.

[edit] Banks
The interbank market caters for both the majority of commercial turnover and large amounts of speculative trading every day. A large bank may trade billions of dollars daily. Some of this trading is undertaken on behalf of customers, but much is conducted by proprietary desks, trading for the bank's own account.
Until recently, foreign exchange brokers did large amounts of business, facilitating interbank trading and matching anonymous counterparts for small fees. Today, however, much of this business has moved on to more efficient electronic systems. The broker squawk box lets traders listen in on ongoing interbank trading and is heard in most trading rooms, but turnover is noticeably smaller than just a few years ago.

[edit] Commercial companies
An important part of this market comes from the financial activities of companies seeking foreign exchange to pay for goods or services. Commercial companies often trade fairly small amounts compared to those of banks or speculators, and their trades often have little short term impact on market rates. Nevertheless, trade flows are an important factor in the long-term direction of a currency's exchange rate. Some multinational companies can have an unpredictable impact when very large positions are covered due to exposures that are ...not widely known by other market participants.

[edit] Central banks
National central banks play an important role in the foreign exchange markets. They try to control the money supply, inflation, and/or interest rates and often have official or unofficial target rates for their currencies. They can use their often substantial foreign exchange reserves to stabilize the market. Milton Friedman argued that the best stabilization strategy would be for central banks to buy when the exchange rate is too low, and to sell when the rate is too high—that is, to trade for a profit based on their more precise information. Nevertheless, the effectiveness of central bank "stabilizing speculation" is doubtful because central banks do not go bankrupt if they make large losses, like other traders would, and there is no convincing evidence that they do make a profit trading.
The mere expectation or rumor of central bank intervention might be enough to stabilize a currency, but aggressive intervention might be used several times each year in countries with a dirty float currency regime. Central banks do not always achieve their objectives. The combined resources of the market can easily overwhelm any central bank.[6] Several scenarios of this nature were seen in the 1992–93 ERM collapse, and in more recent times in Southeast Asia.

[edit] Hedge funds as speculators
About 70% to 90% of the foreign exchange transactions are speculative. In other words, the person or institution that bought or sold the currency has no plan to actually take delivery of the currency in the end; rather, they were solely speculating on the movement of that particular currency. Hedge funds have gained a reputation for aggressive currency speculation since 1996. They control billions of dollars of equity and may borrow billions more, and thus may overwhelm intervention by central banks to support almost any currency, if the economic fundamentals are in the hedge funds' favor.

[edit] Investment management firms
Investment management firms (who typically manage large accounts on behalf of customers such as pension funds and endowments) use the foreign exchange market to facilitate transactions in foreign securities. For example, an investment manager bearing an international equity portfolio needs to purchase and sell several pairs of foreign currencies to pay for foreign securities purchases.
Some investment management firms also have more speculative specialist currency overlay operations, which manage clients' currency exposures with the aim of generating profits as well as limiting risk. Whilst the number of this type of specialist firms is quite small, many have a large value of assets under management (AUM), and hence can generate large trades.

[edit] Retail foreign exchange brokers
There are two types of retail brokers offering the opportunity for speculative trading: retail foreign exchange brokers and market makers. Retail traders (individuals) are a small fraction of this market and may only participate indirectly through brokers or banks. Retail brokers, while largely controlled and regulated by the CFTC and NFA might be subject to foreign exchange scams.[7][8] At present, the NFA and CFTC are imposing stricter requirements, particularly in relation to the amount of Net Capitalization required of its members. As a result many of the smaller, and perhaps questionable brokers are now gone. It is not widely understood that retail brokers and market makers typically trade against their clients and frequently take the other side of their trades. This can often create a potential conflict of interest and give rise to some of the unpleasant experiences some traders have had. A move toward NDD (No Dealing Desk) and STP (Straight Through Processing) has helped to resolve some of these concerns and restore trader confidence, but caution is still advised in ensuring that all is as it is presented.

[edit] Other
Non-bank foreign exchange companies offer currency exchange and international payments to private individuals and companies. These are also known as foreign exchange brokers but are distinct in that they do not offer speculative trading but currency exchange with payments. I.e., there is usually a physical delivery of currency to a bank account.
It is estimated that in the UK, 14% of currency transfers/payments are made via Foreign Exchange Companies.[9] These companies' selling point is usually that they will offer better exchange rates or cheaper payments than the customer's bank. These companies differ from Money Transfer/Remittance Companies in that they generally offer higher-value services.
Money transfer/remittance companies perform high-volume low-value transfers generally by economic migrants back to their home country. In 2007, the Aite Group estimated that there were $369 billion of remittances (an increase of 8% on the previous year). The four largest markets (India, China, Mexico and the Philippines) receive $95 billion. The largest and best known provider is Western Union with 345,000 agents globally.

[edit] Trading characteristics
Most traded currencies[2]Currency distribution of reported FX market turnover
Rank
Currency
ISO 4217 code(Symbol)
% daily share(April 2007)
1
United States dollar
USD ($)
86.3%
2
Euro
EUR (€)
37.0%
3
Japanese yen
JPY (¥)
16.5%
4
Pound sterling
GBP (£)
15.0%
5
Swiss franc
CHF (Fr)
6.8%
6
Australian dollar
AUD ($)
6.7%
7
Canadian dollar
CAD ($)
4.2%
8-9
Swedish krona
SEK (kr)
2.8%
8-9
Hong Kong dollar
HKD ($)
2.8%
10
Norwegian krone
NOK (kr)
2.2%
11
New Zealand dollar
NZD ($)
1.9%
12
Mexican peso
MXN ($)
1.3%
13
Singapore dollar
SGD ($)
1.2%
14
South Korean won
KRW (₩)
1.1%
Other
14.5%
Total
200%
There is no unified or centrally cleared market for the majority of FX trades, and there is very little cross-border regulation. Due to the over-the-counter (OTC) nature of currency markets, there are rather a number of interconnected marketplaces, where different currencies instruments are traded. This implies that there is not a single exchange rate but rather a number of different rates (prices), depending on what bank or market maker is trading, and where it is. In practice the rates are often very close, otherwise they could be exploited by arbitrageurs instantaneously. Due to London's dominance in the market, a particular currency's quoted price is usually the London market price. A joint venture of the Chicago Mercantile Exchange and Reuters, called Fxmarketspace opened in 2007 and aspired but failed to the role of a central market clearing mechanism.
The main trading center is London, but New York, Tokyo, Hong Kong and Singapore are all important centers as well. Banks throughout the world participate. Currency trading happens continuously throughout the day; as the Asian trading session ends, the European session begins, followed by the North American session and then back to the Asian session, excluding weekends.
Fluctuations in exchange rates are usually caused by actual monetary flows as well as by expectations of changes in monetary flows caused by changes in gross domestic product (GDP) growth, inflation (purchasing power parity theory), interest rates (interest rate parity, Domestic Fisher effect, International Fisher effect), budget and trade deficits or surpluses, large cross-border M&A deals and other macroeconomic conditions. Major news is released publicly, often on scheduled dates, so many people have access to the same news at the same time. However, the large banks have an important advantage; they can see their customers' order flow.
Currencies are traded against one another. Each pair of currencies thus constitutes an individual product and is traditionally noted XXX/YYY, where YYY is the ISO 4217 international three-letter code of the currency into which the price of one unit of XXX is expressed (called base currency). For instance, EUR/USD is the price of the euro expressed in US dollars, as in 1 euro = 1.5465 dollar. Out of convention, the first currency in the pair, the base currency, was the stronger currency at the creation of the pair. The second currency, counter currency, was the weaker currency at the creation of the pair.
The factors affecting XXX will affect both XXX/YYY and XXX/ZZZ. This causes positive currency correlation between XXX/YYY and XXX/ZZZ.
On the spot market, according to the BIS study, the most heavily traded products were:
EUR/USD: 27%
USD/JPY: 13%
GBP/USD (also called sterling or cable): 12%
and the US currency was involved in 86.3% of transactions, followed by the euro (37.0%), the yen (16.5%), and sterling (15.0%) (see table). Note that volume percentages should add up to 200%: 100% for all the sellers and 100% for all the buyers.
Trading in the euro has grown considerably since the currency's creation in January 1999, and how long the foreign exchange market will remain dollar-centered is open to debate. Until recently, trading the euro versus a non-European currency ZZZ would have usually involved two trades: EUR/USD and USD/ZZZ. The exception to this is EUR/JPY, which is an established traded currency pair in the interbank spot market. As the dollar's value has eroded during 2008, interest in using the euro as reference currency for prices in commodities (such as oil), as well as a larger component of foreign reserves by banks, has increased dramatically. Transactions in the currencies of commodity-producing countries, such as AUD, NZD, CAD, have also increased.

[edit] Determinants of FX Rates
See also: exchange rates
The following theories explain the fluctuations in FX rates in a floating exchange rate regime (In a fixed exchange rate regime, FX rates are decided by its government):
(a) International parity conditions viz; purchasing power parity, interest rate parity, Domestic Fisher effect, International Fisher effect. Though to some extent the above theories provide logical explanation for the fluctuations in exchange rates, yet these theories falter as they are based on challengeable assumptions [e.g., free flow of goods, services and capital] which seldom hold true in the real world.
(b) Balance of payments model (see exchange rate). This model, however, focuses largely on tradable goods and services, ignoring the increasing role of global capital flows. It failed to provide any explanation for continuous appreciation of dollar during 1980s and most part of 1990s in face of soaring US current account deficit.
(c) Asset market model (see exchange rate) views currencies as an important asset class for constructing investment portfolios. Assets prices are influenced mostly by people’s willingness to hold the existing quantities of assets, which in turn depends on their expectations on the future worth of these assets. The asset market model of exchange rate determination states that “the exchange rate between two currencies represents the price that just balances the relative supplies of, and demand for, assets denominated in those currencies.”
None of the models developed so far succeed to explain FX rates levels and volatility in the longer time frames. For shorter time frames (less than a few days) algorithm can be devised to predict prices. Large and small institutions and professional individual traders have made consistent profits from it. It is understood from above models that many macroeconomic factors affect the exchange rates and in the end currency prices are a result of dual forces of demand and supply. The world's currency markets can be viewed as a huge melting pot: in a large and ever-changing mix of current events, supply and demand factors are constantly shifting, and the price of one currency in relation to another shifts accordingly. No other market encompasses (and distills) as much of what is going on in the world at any given time as foreign exchange.
Supply and demand for any given currency, and thus its value, are not influenced by any single element, but rather by several. These elements generally fall into three categories: economic factors, political conditions and market psychology.

[edit] Economic factors
These include: (a)economic policy, disseminated by government agencies and central banks, (b)economic conditions, generally revealed through economic reports, and other economic indicators.
Economic policy comprises government fiscal policy (budget/spending practices) and monetary policy (the means by which a government's central bank influences the supply and "cost" of money, which is reflected by the level of interest rates).
Economic conditions include:
Government budget deficits or surpluses
The market usually reacts negatively to widening government budget deficits, and positively to narrowing budget deficits. The impact is reflected in the value of a country's currency.
Balance of trade levels and trends
The trade flow between countries illustrates the demand for goods and services, which in turn indicates demand for a country's currency to conduct trade. Surpluses and deficits in trade of goods and services reflect the competitiveness of a nation's economy. For example, trade deficits may have a negative impact on a nation's currency.
Inflation levels and trends
Typically a currency will lose value if there is a high level of inflation in the country or if inflation levels are perceived to be rising [. This is because inflation erodes purchasing power, thus demand, for that particular currency. However, a currency may sometimes strengthen when inflation rises because of expectations that the central bank will raise short-term interest rates to combat rising inflation.
Economic growth and health
Reports such as GDP, employment levels, retail sales, capacity utilization and others, detail the levels of a country's economic growth and health. Generally, the more healthy and robust a country's economy, the better its currency will perform, and the more demand for it there will be.
Productivity of an economy
Increasing productivity in an economy should positively influence the value of its currency. It affects are more prominent if the increase is in the traded sector [3].

[edit] Political conditions
Internal, regional, and international political conditions and events can have a profound effect on currency markets.
All exchange rates are susceptible to political instability and anticipations about the new ruling party. Political upheaval and instability can have a negative impact on a nation's economy. For example, destabilization of coalition governments in India, Pakistan and Thailand can negatively affect the value of their currencies. Similarly, in a country experiencing financial difficulties, the rise of a political faction that is perceived to be fiscally responsible can have the opposite effect. Also, events in one country in a region may spur positive or negative interest in a neighboring country and, in the process, affect its currency.

[edit] Market psychology
Market psychology and trader perceptions influence the foreign exchange market in a variety of ways:
Flights to quality
Unsettling international events can lead to a "flight to quality," with investors seeking a "safe haven". There will be a greater demand, thus a higher price, for currencies perceived as stronger over their relatively weaker counterparts. The Swiss franc has been a traditional safe haven during times of political or economic uncertainty.[10]
Long-term trends
Currency markets often move in visible long-term trends. Although currencies do not have an annual growing season like physical commodities, business cycles do make themselves felt. Cycle analysis looks at longer-term price trends that may rise from economic or political trends. [11]
"Buy the rumor, sell the fact"
This market truism can apply to many currency situations. It is the tendency for the price of a currency to reflect the impact of a particular action before it occurs and, when the anticipated event comes to pass, react in exactly the opposite direction. This may also be referred to as a market being "oversold" or "overbought".[12] To buy the rumor or sell the fact can also be an example of the cognitive bias known as anchoring, when investors focus too much on the relevance of outside events to currency prices.
Economic numbers
While economic numbers can certainly reflect economic policy, some reports and numbers take on a talisman-like effect: the number itself becomes important to market psychology and may have an immediate impact on short-term market moves. "What to watch" can change over time. In recent years, for example, money supply, employment, trade balance figures and inflation numbers have all taken turns in the spotlight.
Technical trading considerations
As in other markets, the accumulated price movements in a currency pair such as EUR/USD can form apparent patterns that traders may attempt to use. Many traders study price charts in order to identify such patterns.[13]

[edit] Algorithmic trading in foreign exchange
Electronic trading is growing in the FX market, and algorithmic trading is becoming much more common. According to financial consultancy Celent estimates, by 2008 up to 25% of all trades by volume will be executed using algorithm, up from about 18% in 2005.[citation needed]
An algorithmic trader needs to be mindful of potential fraud by the broker. Part of the weekly algorithm should include a check to see if the amount of transaction errors when the trader is losing money occurs in the same proportion as when the trader would have made money.

[edit] Financial instruments

[edit] Spot
A spot transaction is a two-day delivery transaction (except in the case of the Canadian dollar and the Mexican Nuevo Peso, which settle the next day), as opposed to the futures contracts, which are usually three months. This trade represents a “direct exchange” between two currencies, has the shortest time frame, involves cash rather than a contract; and interest is not included in the agreed-upon transaction. The data for this study come from the spot market. Spot transactions has the second largest turnover by volume after Swap transactions among all FX transactions in the Global FX market.

[edit] Forward
See also: forward contract
One way to deal with the foreign exchange risk is to engage in a forward transaction. In this transaction, money does not actually change hands until some agreed upon future date. A buyer and seller agree on an exchange rate for any date in the future, and the transaction occurs on that date, regardless of what the market rates are then. The duration of the trade can be a one day, a few days, months or years.

[edit] Future
Main article: currency future
Foreign currency futures are exchange traded forward transactions with standard contract sizes and maturity dates — for example, $1000 for next November at an agreed rate [4],[5]. Futures are standardized and are usually traded on an exchange created for this purpose. The average contract length is roughly 3 months. Futures contracts are usually inclusive of any interest amounts.

[edit] Swap
Main article: foreign exchange swap
The most common type of forward transaction is the currency swap. In a swap, two parties exchange currencies for a certain length of time and agree to reverse the transaction at a later date. These are not standardized contracts and are not traded through an exchange.

[edit] Option
Main article: foreign exchange option
A foreign exchange option (commonly shortened to just FX option) is a derivative where the owner has the right but not the obligation to exchange money denominated in one currency into another currency at a pre-agreed exchange rate on a specified date. The FX options market is the deepest, largest and most liquid market for options of any kind in the world.

[edit] Exchange Traded Fund
Main article: exchange-traded fund
Exchange-traded funds (or ETFs) are open ended investment companies that can be traded at any time throughout the course of the day. Typically, ETFs try to replicate a stock market index such as the S&P 500 (e.g., SPY), but recently they are now replicating investments in the currency markets with the ETF increasing in value when the US Dollar weakens versus a specific currency, such as the Euro. Certain of these funds track the price movements of world currencies versus the US Dollar, and increase in value directly counter to the US Dollar, allowing for speculation in the US Dollar for US and US Dollar denominated investors and speculators.

[edit] Speculation
Controversy about currency speculators and their effect on currency devaluations and national economies recurs regularly. Nevertheless, economists including Milton Friedman have argued that speculators ultimately are a stabilizing influence on the market and perform the important function of providing a market for hedgers and transferring risk from those people who don't wish to bear it, to those who do.[14] Other economists such as Joseph Stiglitz consider this argument to be based more on politics and a free market philosophy than on economics.[15]
Large hedge funds and other well capitalized "position traders" are the main professional speculators.
Currency speculation is considered a highly suspect activity in many countries. While investment in traditional financial instruments like bonds or stocks often is considered to contribute positively to economic growth by providing capital, currency speculation does not; according to this view, it is simply gambling that often interferes with economic policy. For example, in 1992, currency speculation forced the Central Bank of Sweden to raise interest rates for a few days to 500% per annum, and later to devalue the krona.[16] Former Malaysian Prime Minister Mahathir Mohamad is one well known proponent of this view. He blamed the devaluation of the Malaysian ringgit in 1997 on George Soros and other speculators.[17]
Gregory J. Millman reports on an opposing view, comparing speculators to "vigilantes" who simply help "enforce" international agreements and anticipate the effects of basic economic "laws" in order to profit.[17]
In this view, countries may develop unsustainable financial bubbles or otherwise mishandle their national economies, and foreign exchange speculators allegedly made the inevitable collapse happen sooner. A relatively quick collapse might even be preferable to continued economic mishandling. Mahathir Mohamad and other critics of speculation are viewed as trying to deflect the blame from themselves for having caused the unsustainable economic conditions. Given that Malaysia recovered quickly after imposing currency controls directly against IMF advice, this view is open to doubt.

[edit] References
^ Sullivan, arthur; Steven M. Sheffrin (2003). Economics: Principles in action. Upper Saddle River, New Jersey 07458: Pearson Prentice Hall. pp. 551. ISBN 0-13-063085-3. http://www.pearsonschool.com/index.cfm?locator=PSZ3R9&PMDbSiteId=2781&PMDbSolutionId=6724&PMDbCategoryId=&PMDbProgramId=12881&level=4.
^ a b c Triennial Central Bank Survey (December 2007), Bank for International Settlements.
^ a b Annual FX poll (May 2008), Euromoney.
^ Source: Euromoney FX survey FX Poll 2008: The Euromoney FX survey is the largest global poll of foreign exchange service providers.'
^ http://www.ifsl.org.uk/upload/CBS_Foreign_Exchange_2007.pdf (December 2007), International Financial Services, London.
^ Alan Greenspan, The Roots of the Mortgage Crisis: Bubbles cannot be safely defused by monetary policy before the speculative fever breaks on its own. , the Wall Street Journal, December 12, 2007
^ McKay, Peter A. (2005-07-26). "Scammers Operating on Periphery Of CFTC's Domain Lure Little Guy With Fantastic Promises of Profits". The Wall Street Journal (Dow Jones and Company). http://online.wsj.com/article/SB112233850336095645.html?mod=Markets-Main. Retrieved on 2007-10-31.
^ Egan, Jack (2005-06-19). "Check the Currency Risk. Then Multiply by 100". The New York Times. http://www.nytimes.com/2005/06/19/business/yourmoney/19fore.html?_r=2&adxnnl=1&oref=slogin&adxnnlx=1191337503-g1yHfewhqPWye0XtI+Eq0A&oref=slogin. Retrieved on 2007-10-30.
^ The Sunday Times (UK), 16 July 2006
^ Safe haven currency
^ John J. Murphy, Technical Analysis of the Financial Markets (New York Institute of Finance, 1999), pp. 343–375.
^ Investopedia
^ Sam Y. Cross, All About the Foreign Exchange Market in the United States, Federal Reserve Bank of New York (1998), chapter 11, pp. 113–115.
^ Michael A. S. Guth, "Profitable Destabilizing Speculation," Chapter 1 in Michael A. S. Guth, SPECULATIVE BEHAVIOR AND THE OPERATION OF COMPETITIVE MARKETS UNDER UNCERTAINTY, Avebury Ashgate Publishing, Aldorshot, England (1994), ISBN 1856289850.
^ What I Learned at the World Economic Crisis Joseph Stiglitz, The New Republic, April 17, 2000, reprinted at GlobalPolicy.org
^ But Don't Rush Out to Buy Kronor: Sweden's 500% Gamble - International Herald Tribune
^ a b Gregory J. Millman, Around the World on a Trillion Dollars a Day, Bantam Press, New York, 1995.

[edit] See also
Balance of trade
Bretton Woods system
Currency pair
Foreign currency mortgage
Foreign exchange hedge
Foreign exchange reserves
Foreign exchange scam
Foreign exchange swap
Retail foreign exchange
Special Drawing Rights
Tobin Tax
World currency
Major inter-dealer FX brokers: EBS, Reuters
Major retail FX brokers: FXCM, World First, HY Markets, Travelex, Henyep Investment, Varengold Bank FX

[edit] External links
Benchmark Currency Rates from Bloomberg
CFTC Commission Advisory Customer fraud Protection
United States Federal Reserve daily update
Microstructure effects, bid-ask spreads and volatility in the spot foreign exchange market pre and post-EMU Technical description of FX market workings.
OECD Exchange rate statistics

South Africa Forex


The Republic of South Africa is a country located at the southern tip of the African continent. It borders Namibia, Botswana, Zimbabwe, Mozambique, and Swaziland, while a sixth country, Lesotho, is an enclave entirely surrounded by South African territory.
South Africa has experienced a significantly different evolution from other nations in Africa as a result of two facts. Firstly, immigration from Europe reached levels not experienced in other African communities. Secondly, the strategic importance of the Cape Sea Route, as emphasised by the closure of the Suez Canal during the Six Day War, and mineralogical wealth made the country extremely important to Western interests, particularly during the Cold War. As a result of the former, South Africa is a very racially diverse nation. It has the largest population of people of 'coloured' (mixed race) communities in Africa. Black South Africans account for slightly less than 80% of the population.
Racial strife between the white minority and the black majority has played a large part in the country's history and politics, culminating in apartheid, an official policy of 'separate development', which was instituted in 1948 by the National Party, although segregation existed prior to that date. The laws that defined apartheid began to be repealed or abolished by the National Party in 1990 after a long and sometimes violent struggle (including economic sanctions from the international community) by the black majority as well as many white, coloured, and Indian South Africans.
The country is one of the few in Africa never to have had a coup d'état, and regular elections have been held for almost a century; however, the vast majority of black South Africans were not enfranchised until 1994. The economy of South Africa is the largest and best developed on the continent, with modern infrastructure common throughout the country.
South Africa is often referred to as The Rainbow Nation - a term coined by Archbishop Desmond Tutu and later elaborated upon by then-President Nelson Mandela as a metaphor to describe the country's newly-developing multicultural diversity in the wake of segregationist apartheid ideology.
South Africa will be the host nation for the 2010 FIFA World Cup. It will be the first time the tournament is held in Africa.
Contents[hide]
1 History
2 Politics
3 Administrative divisions
4 Geography
5 Flora and fauna
6 Economy
7 Agriculture
8 Demographics
9 Culture
9.1 Languages
10 Crime
11 Military
12 Media
13 References
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History
South Africa contains some of the oldest archaeological sites in Africa. Extensive fossil remains at the Sterkfontein, Kromdraai and Makapansgat caves suggest that various australopithecines existed in South Africa from about three million years ago. These were succeeded by various species of Homo, including Homo habilis, Homo erectus and modern man, Homo sapiens. Bantu-speaking peoples (the term Bantu is a linguistic term not an ethnic one), iron-using agriculturists and herdsmen, moved south of the Limpopo River into modern-day South Africa by the 4th or 5th century (the Bantu expansion) displacing the original Khoi and San speakers. They slowly moved south and the earliest ironworks in modern-day KwaZulu-Natal Province are believed to date from around 1050. The southernmost group was the Xhosa people, whose language incorporates certain linguistic traits from the earlier Khoi and San people, reaching the Fish River, in today's Eastern Cape Province. These Iron Age populations displaced earlier hunter-gatherer peoples as they migrated.
The written history of South Africa begins with the accounts of European navigators passing South Africa on the East Indies trade routes. Subsequent to the first circumnavigation of the Cape in 1488 by the Portuguese Explorer Bartolomeu Dias a number of shipwrecks occurred along the Southern African coast. Along with the accounts of the early navigators, the accounts of shipwreck survivors provide the earliest written accounts of Southern Africa. In the two centuries following 1488 a number of small fishing settlements were made along the coast by Portuguese sailors, but no written account of these settlements survives. In 1652 a victualling station was established at the Cape of Good Hope by Jan van Riebeeck on behalf of the Dutch East India Company. For most of the 17th and 18th centuries, the slowly expanding settlement was a Dutch possession. The Dutch settlers eventually met the southwesterly expanding Xhosa people in the region of the Fish River. A series of wars, called Cape Frontier Wars, ensued, mainly caused by conflicting land and livestock interests.
To ease Cape labour shortages slaves were brought from Indonesia, Madagascar, and India. Furthermore, troublesome leaders, often of royal descent, were banished from Dutch colonies to South Africa. This group of slaves eventually gave rise to a population that now identifies themselves as "Cape Malays". Cape Malays have traditionally been accorded a higher social status by the European colonists - many became wealthy landowners, but became increasingly dispossessed as Apartheid developed. Cape Malay mosques in District Six were spared, and now serve as monuments for the destruction that occurred around them.
Most of the descendants of these slaves, who often married with Dutch settlers, were later classified together with the remnants of the Khoikhoi as Cape Coloureds. Further intermingling within the Cape Coloured population itself, as well as with Xhosa and other South African people, now means that they constitute roughly 50% of the population in the Western Cape Province.
Great Britain seized the Cape of Good Hope area in 1797 during the Fourth Anglo-Dutch War. The Dutch East India Company declared bankruptcy, and the British annexed the Cape Colony in 1805. The British continued the frontier wars against the AmaXhosa, pushing the eastern frontier eastward through a line of forts established along the Fish River and consolidating it by encouraging British settlement. Due to pressure of abolitionist societies in Britain, the British parliament first stopped its global slave trade in 1806, then abolished slavery in all its colonies in 1833. In reaction to these and other liberalizing policies, thousands of Afrikaners initiated the Great Trek, a mass exodus from the Cape Colony. The trekkers first stop was the coastal strip of land to the Cape Colony's east, where they established their first independent polity, Natalia Republiek (Natalia Republic). The British quickly annexed it as the Colony of Natal, however, and the trekkers moved on into the Cape's interior hinterland. There they established two new Boer Republics: The South African Republic, also known as the Transvaal, and the Orange Free State.

(PD) Photo: Library of Congress British troops during the Second Boer War, 1900. The UK eventually won the war, and absorbed the two Boer republics into the empire.
The discovery of diamonds in 1867 and gold in 1886 encouraged economic growth and immigration, intensifying the subjugation of the natives. The Boers successfully resisted British encroachments during the First Boer War (1880–1881) using tactics much better suited to local conditions. For example, the Boers wore khaki clothing, which was the same colour as the earth, whereas the British wore bright red uniforms, making them easy targets for Boer sharpshooters. The British returned in greater numbers without their red jackets in the Second Boer War (1899–1902), which was largely opposed by the Liberal Party in the British Parliament. The Boers' attempt to ally themselves with German South West Africa provided the British with yet another excuse to take control of the Boer Republics.
The Boers resisted fiercely, but the British eventually overwhelmed the Boer forces, using their superior numbers and external supply chains and concentration camps as well as the controversial scorched earth tactic. The Treaty of Vereeniging specified full British sovereignty over the South African republics, and the British government agreed to assume the £3,000,000 war debt owed by the Afrikaner governments. One of the main provisions of the treaty ending the war was that 'Blacks' would not be allowed to vote, except in the Cape Colony.
After four years of negotiations, the Union of South Africa was created from the Cape and Natal colonies, as well as the republics of Orange Free State and Transvaal, on May 31, 1910, exactly eight years after the end of the Second Boer War. The newly-created Union of South Africa was a dominion. In 1934 the South African Party and National Party merged to form the United Party, seeking reconciliation between Afrikaners and English-speaking 'Whites', but split in 1939 over the Union's entry into World War II as an ally of the United Kingdom. The right-wing National Party sympathised with Nazi Germany during the war, and sought greater racial segregation, or apartheid, after it.
In 1948, the National Party was elected to power, and began implementing a series of harsh segregationist laws that would become known collectively as apartheid. Not surprisingly, this segregation also applied to the wealth acquired during rapid industrialization of the 1950s, '60s, and '70s. While the White minority enjoyed the highest standard of living in all of Africa, often comparable to "First World" western nations, the Black majority remained disadvantaged by almost every standard, including income, education, housing, and life expectancy. However, the average income and life expectancy of a black, 'Indian' or 'colored' South African compared favorably to many other African states, such as Ghana and Tanzania.

(GNU) Photo: Ulrich Stelzner Apartheid era sign at a public beach, 1985.
Apartheid became increasingly controversial, leading to widespread sanctions and divestment abroad and growing unrest and oppression within South Africa. (See also special section on History of South Africa in the apartheid era.) A long period of harsh suppression by the government, and resistance, strikes, marches, protests, and sabotage, by various anti-apartheid movements, most notably the African National Congress (ANC), followed.
In 1987 the SADF go in Angola to help the UNITA, but in Battle of Cuito Cuanavale South Africa and UNITA are defeated by Cuba and Angola[1]. A few months later, 1988, Cuba defeated the SADF again in Calueque, wining the Bush War, so called Border War or Angola War[2]. Then South Africa ask for the peace and accept several conditions never accepted before[3].
In 1989 elections are summoned in Namibia with every parties, included SWAPO. In 1990 Namibia is independent.
In 1990 the National Party government took the first step towards negotiating itself out of power when it lifted the ban on the African National Congress and other left-wing political organisations, and released Nelson Mandela from prison after 27 years. Apartheid legislation was gradually removed from the statute books, and the first multi-racial elections were held in 1994. The ANC won by an overwhelming majority, and has been in power ever since.
Despite the end of apartheid, millions of South Africans, mostly black, continue to live in poverty. This is attributed to the legacy of the apartheid regime and, increasingly, what many see as the failure of the current government to tackle social issues, coupled with the monetary and fiscal discipline of the current government to ensure both redistribution of wealth and economic growth. However, the ANC's social housing policy has produced some improvement in living conditions in many areas by redirecting fiscal spending and improving the efficiency of the tax collection system.
Politics
South Africa has a bicameral Parliament: the National Council of Provinces (or upper house) with 90 members, and a National Assembly (or lower house) with 400 members. Members of the lower house are elected on a population basis by proportional representation: half of the members are elected from national lists and half are elected from provincial lists. Ten members are elected to represent each province in the National Council of Provinces, regardless of the population of the province. Elections for both chambers are held every five years. The government is formed in the lower house, and the leader of the majority party in the National Assembly is the President.
Current South African politics is dominated by the African National Congress (ANC), which received 69.7% of the vote during the last 2004 general election and 66.3% of the vote in the 2006 municipal election. The main challenger to the ANC's rule is the Democratic Alliance party, which received 12.4% of the vote in the 2004 election and 14.8% in the 2006 election. The leader of this party is Tony Leon. The formerly dominant New National Party, which introduced apartheid through its predecessor, the National Party, has suffered increasing humiliation at election polls since 1994, and finally voted to disband. It chose to merge with the ANC on 9 April 2005. Other major political parties represented in Parliament are the Inkatha Freedom Party, which mainly represents Zulu voters, and the Independent Democrats, who took 6.97% and 1.7% of the vote respectively in the 2004 election.
Administrative divisions
When apartheid ended in 1994, the South African government had to integrate the formerly independent and semi-independent Bantustans into the political structure of South Africa. To this end, it abolished the four former provinces of South Africa (Cape Province, Natal, Orange Free State, and Transvaal) and replaced them with nine fully integrated provinces. The new provinces are usually much smaller than the former provinces, which theoretically is in order to give local governments more resources to distribute over smaller areas.
The nine provinces are further sub-divided into 52 districts, six of which are metropolitan and 46 district municipalities. The 46 district municipalities are further subdivided into 231 local municipalities. The district municipalities also contain 20 district management areas (mostly game parks) which are directly governed by the district municipalities. The six metropolitan municipalities perform the functions of both district and local municipalities.
Geography

(CC) Photo: Paul Watson Dawn on Robben Island looking towards Cape Town.
South Africa is located at the extreme south of Africa, with a long coastline that stretches more than 2,500 kilometres (1,550 mi) and across two oceans (the Atlantic and the Indian). At 470,979 mi² (1,219,912 km²[1]), South Africa is the world's 25th-largest country (after Mali). It is comparable in size to Colombia, and is nearly twice the size of the US state of Texas.
South Africa has a great variety of climate zones, from the extreme desert of the Kalahari near Namibia to lush subtropical climate along the border with Mozambique. It quickly rises over a mountainous escarpment towards the interior plateau known as the Highveld. Even though South Africa is classified as semi-arid, there is considerable variation in climate as well as topography.
The interior of South Africa is a giant, mountainous, and sparsely populated scrubland Karoo plateau, which is drier towards the northwest along the Kalahari desert. In contrast, the eastern coastline is lush and well-watered, which produces a climate similar to the tropics. The extreme southwest has a climate remarkably similar to that of the Mediterranean with wet winters and hot, dry summers. This area also produces much of South Africa's wine. This region is also particularly known for its wind, which blows intermittently almost all year. The severity of this wind made passing around the Cape of Good Hope particularly treacherous for sailors, causing many shipwrecks. Further east on the country's south coast, rainfall is distributed more evenly throughout the year, producing a green landscape. This area is popularly known as the Garden Route.
The Free State is particularly flat due to the fact that the eastern region of the Highveld does not extend as far north as the western region. North of the Vaal River, the Highveld becomes better watered and does not experience subtropical extremes of heat. Johannesburg, in the centre of the Highveld, is at 1,740 metres (5,709 ft) and receives an annual rainfall of 760 millimetres (30 in). Winters in this region are cold, although snow is rare.
To the north and east of Johannesburg, the altitude drops beyond the Highveld's escarpment, and turns into the Lowveld. The Lowveld has particularly high temperatures, and is also the location of traditional South African Bushveld. The high Drakensberg mountains, which form the eastern escarpment of the Highveld, offer limited skiing opportunities in winter. Many people think that the coldest place in South Africa is Sutherland in the western Roggeveld Mountains, where midwinter temperatures can reach as low as –15 degrees Celsius (5 °F). In fact, the coldest place is actually Buffelsfontein, which is in the Molteno district of the Eastern Cape. Buffelsfontein recorded a low of –18.6 degrees Celsius. The deep interior has the hottest temperatures: A temperature of 51.7 °C (125 °F) was recorded in 1948 in the Northern Cape Kalahari near Upington.[4]
South Africa also has one possession, the small sub-antarctic archipelago of the Prince Edward Islands, consisting of Marion Island (290 km²/112 mi²) and Prince Edward Island (45 km²/17.3 mi²) (not to be confused with the Canadian province of the same name).
Flora and fauna
South Africa has more than 20,000 different plants, or about 10% of all the known species of plants on Earth, making it particularly rich in plant biodiversity.
South Africa's most prevalent biome is grassland, particularly on the Highveld, where the plant cover is dominated by different grasses, low shrubs, and acacia trees, mainly camel-thorn and whitethorn. Vegetation becomes even more sparse towards the northwest due to low rainfall. There are several species of water-storing succulents like aloes and euphorbias in the very hot and dry Namaqualand area. The grass and thorn savannah turns slowly into a bush savannah towards the northeast of the country, with more dense growth. There are significant numbers of baobab trees in this area, near the northern end of Kruger National Park.[5]
The Fynbos Biome, one of the six floral kingdoms, is located in a small region of the Western Cape and contains more than 9,000 of those species, making it among the richest regions on earth in terms of floral biodiversity. The majority of the plants are evergreen hard-leaf plants with fine, needle-like leaves, such as the sclerophyllous plants. Another uniquely South African plant is the protea genus of flowering plants. There are around 130 different species of protea in South Africa.
While South Africa has a great wealth of flowering plants, it has few forests. Only 1% of South Africa is forest, almost exclusively in the humid coastal plain along the Indian Ocean in KwaZulu-Natal. There are even smaller reserves of forests that are out of the reach of fire, known as montane forests. Plantations of imported tree species are predominant, particularly the non-native eucalyptus and pine. South Africa has lost extensive acreage of natural habitat in the last four decades, primarily due to overpopulation and sprawling development patterns. South Africa is one of the worst affected countries in the world when it comes to invasion by alien species with many e.g. Black Wattle, Port Jackson, Hakea, Lantana and Jacaranda posing a significant threat to the native biodiversity and the already scarce water resources. The original temperate forest that met the first European settlers to South Africa was exploited ruthlessly until only small patches remained. Currently, South African hardwood trees like Real Yellowwood (Podocarpus latifolius), stinkwood (Ocotea bullata), and South African Black Ironwood (Olea laurifolia) are under government protection.
Numerous mammals are found in the bushveld habitats including lion, leopard, White Rhino, Blue Wildebeest, kudu, impala and giraffe. There is a significant extent of the bushveld habitat in the northeast including Kruger National Park and the Mala Mala Reserve, as well as in the far north in the Waterberg Biosphere.
Economy

Public Domain The Big Hole, a huge open-pit diamond mine in Kimberley, 463 meters wide and 215 meters deep.
By UN classification South Africa is a middle-income country with an abundant supply of resources, well-developed financial, legal, communications, energy, and transport sectors, a stock exchange (the JSE Securities Exchange), that ranks among the 10 largest in the world, and a modern infrastructure supporting an efficient distribution of goods to major urban centres throughout the region. South Africa's per capita GDP, corrected for purchasing power parity, positions the country as one of the 50 wealthiest in the world. In many respects, South Africa is developed; however, this development is significantly localised around 4 areas, namely: Cape Town, Port Elizabeth, Durban, and Pretoria-Johannesburg. Beyond these 4 economic centres, development is marginal and poverty still reigns despite Government strategies. However, key marginal areas are experiencing rapid growth recently. Such areas include: Mossel Bay to Plettenberg Bay; Rustenburg area; Nelspruit area; Bloemfontein; Cape West Coast; KZN North Coast amongst others. Large income gaps and a dual economy designate South Africa as developing; South Africa has one of the highest rates of income inequality in the world. Consecutive growth rates in the last ten years are helping lower unemployment; however, the economy still has a way to go, and daunting economic problems remain. Other problems are crime, corruption, and HIV/AIDS. At the start of 2000, President Thabo Mbeki vowed to promote economic growth and foreign investment by relaxing restrictive labour laws, stepping up the pace of privatisation, and cutting unneeded governmental spending. His policies face strong opposition from organised labour. It is estimated that South Africa accounts for up to 30% of the gross domestic product of the entire African continent. South Africa is also the continent's largest energy producer and consumer.
The Rand, the world's most actively traded emerging market currency, has joined an elite club of 15 currencies - the Continuous linked settlement (CLS) - where forex transactions are settled immediately, lowering the risks of transacting across time zones. The South African Rand (ZAR) was the best performing currency against the US Dollar between 2002 and 2005, according to the Bloomberg Currency Scorecard. The volatility of the Rand has affected economic activity, with the rand falling sharply during 2001, hitting an historic low of R13.85 to the United States dollar, raising fears of inflation, and causing the Reserve Bank to increase interest rates. The rand has since recovered, trading at R5.99 to the dollar as of January 2006 while the South African Reserve Bank's policy of inflation targeting has brought inflation under control. The stronger Rand has however put exporters under considerable pressure, with many calling for government to intervene in the exchange rate to help soften the rand, and many others dismissing staff.
21.5% of the adult South African population have been estimated to be HIV positive in 2003.[6] The government has recently, after much delay, devoted substantial resources to fighting the epidemic. A recent study from the African Journal of AIDS Research by Thomas Rehle and Olive Shisana showed the infection rate starting to level off, from 4.2% to 1.7% infection rate for 15-49 year olds, and AIDS deaths peaking at 487,320 in 2008.
In 2000 President Mbeki publicly questioned the importance of HIV in causing AIDS, controversially suggesting that the main cause was "poverty".[7] In 2001 the government appointed a panel of scientists, including a number of AIDS dissidents (who question the mainstream view on HIV), to report back on the issue. Following their report, the government stated that it continues to base its policy on the premise that the cause of AIDS is indeed HIV.[8] The controversy has not abated, and organisations such as the Treatment Action Campaign continue to mount political and legal challenges to what they claim is the government's slow response to the epidemic.
Refugees from poorer neighbouring countries abound with immigrants from the DRC, Mozambique, Zimbabwe, Malawi and many others representing a large portion of the informal sector. With high unemployment levels amongst poorer South Africans, xenophobia is a very real fear and many people born in South Africa feel resentful of immigrants who are seen to be depriving the native population of jobs, a feeling which has been given credibility by the fact that many South African employers have employed migrants from other countries for lower pay than South African citizens, especially in the construction, tourism, agriculture and domestic service industries. Illegal immigrants are also heavily involved in informal trading.[9] However, many immigrants to South Africa continue to live in poor conditions, and the South African immigration policy has become increasingly restrictive since 1994.[10]
Agriculture
South Africa has a large agricultural sector, and is a net exporter of farming products. There are almost a thousand agricultural cooperatives and agribusinesses throughout the country, and agricultural exports have constituted 8% of South Africa's total exports for the past five years. The agricultural industry contributes around 10% of formal employment, relatively low compared to other parts of Africa, as well as providing work for casual labourers and contributing around 2.6% of GDP for the nation.[11] However, due to the aridity of the land, only 13.5% can be used for crop production, and only 3% is considered high potential land.[12]
Although the commercial farming sector is relatively well developed, people in some rural areas still survive on subsistence farming. It is the eighth largest wine producer in the world, and the eleventh largest producer of sunflower seed. South Africa is a net exporter of agricultural products and foodstuffs, the largest number of exported items being sugar, grapes, citrus, nectarines, wine and deciduous fruit. The largest locally produced crop is maize(corn), and it has been estimated that 9 million tons are produced every year, with 7.4 million tons being consumed. Livestock are also popular on South African farms, with the country producing 85% of all meat consumed. The dairy industry consists of around 4,300 milk producers providing employment for 60,000 farm workers and contributing to the livelihoods of around 40,000 others.[13]
In recent years, the agricultural sector has introduced several reforms, some of which are controversial, such as land reform and the deregulation of the market for agricultural products. Land reform has been criticised both by farmers' groups and by landless workers, the latter alleging that the pace of change has not been fast enough, and the former alleging racist treatment and expressing concerns that a similar situation to Robert Mugabe's land reform policy may develop [14], a fear exacerbated by comments made by the country's deputy president.[15][16] The sector continues to face problems with increased foreign competition and crime being two of the major challenges for the industry.
Crime against the farming community continues to be a problem. The rural farm population has shouldered a great increase in attacks and harassment and has suffered as many as 2000 farm murders since 1994, and this has caused many commercial farmers to flee the countryside for the protection of the gated communities of the cities and that offered by other nations. The government has been accused of not devoting enough time and money to tackle the problem as opposed to other forms of violent crime, or simply inefficiency and incompetence.[17]
Another issue which affects South African agriculture is environmental damage caused by misuse of the land and global climate change. South Africa is unusually vulnerable to climate change and resultant diminution of surface waters. Some predictions shows surface water supply could decrease by 60 percent by the year 2070 in parts of the Western Cape.[18] To reverse the damage caused by land mismanagement, the government has supported a scheme which promotes sustainable development and the use of natural resources.[19]
Demographics
South Africa is a nation of over 47 million people of diverse origins, cultures, languages, and beliefs. The 2005 Statistics South Africa census provided five racial categories by which people could classify themselves, the last of which, "unspecified/other" drew negligible responses, and these results were omitted.[20] Results for the other categories were black African at 79.4%, white at 9.3%, coloured at 8.8%, and Indian or Asian at 2.5%.
By far the major part of the population classified itself as African or black, but it is not culturally or linguistically homogenous. Major ethnic groups include the Zulu, Xhosa, Basotho (South Sotho), Bapedi (North Sotho), Venda, Tswana, Tsonga, Swazi and Ndebele. Some, such as the Zulu, Xhosa, Bapedi and Venda groups, are unique to South Africa.
Other groups are distributed across the borders with South Africa's neighbours: The Basotho group is also the major ethnic group in Lesotho. The Tswana ethnic group constitute the majority of the population of Botswana. The Swazi ethnic group is the major ethnic group in Swaziland. The Ndebele ethnic group is also found in Matabeleland in Zimbabwe, where they are known as the Matabele. These Ndebele people are however in effect Zulu people because the language they speak is Zulu and they are the descendants of the Warrior Mzilikazi who escaped persecution from Shaka to settle in that part of the World. The Tsonga ethnic group is also found in southern Mozambique, where they are known as the Shangaan.
The white population descends largely from colonial immigrants: Dutch, German, French Huguenot, and British. Culturally and linguistically, they are divided into the Afrikaners, who speak Afrikaans, and English-speaking groups, many of whom originated from British immigrants (see Anglo African). Many small communities immigrating over the last century retain the use of other languages. The white population is on the decrease due to a low birth rate and emigration; as a factor in their decision to emigrate, many cite the high crime rate and the government's affirmative action policies.
The term "coloured" is still largely used for the people of mixed race descended from slaves brought in from East and Central Africa, the indigenous Khoisan who lived in the Cape at the time, indigenous African Blacks, Whites (mostly the Dutch/Afrikaner and British settlers) as well as an admixture of Javanese, Malay, Indian, Malagasy and other European (such as Portuguese) and Asian blood (such as Burmese). The majority speak Afrikaans. Khoisan is a term used to describe two separate groups, physically similar in that they were light-skinned and small in stature. The Khoikhoi, who were called Hottentots by the Europeans, were pastoralists and were effectively annihilated; the San, called Bushmen by the Europeans, were hunter-gatherers. Within what is known as the Coloured community, you will also find some more recent immigrants - Coloureds from the old Rhodesia (now Zimbabwe) and Namibia, as well as immigrants of mixed descent from India and Burma (Anglo-Indians/Anglo-Burmese) who were welcomed to the Cape when India and Burma received their Independence.
The major part of the Asian population of the country is Indian in origin, many of them descended from indentured workers brought in the 19th century to work on the sugar plantations of the eastern coastal area then known as Natal. There is also a significant group of Chinese South Africans (approximately 100 000 individuals).
Culture
It may be argued that there is no "single" culture in South Africa because of its ethnic diversity. Today, the diversity in foods from many cultures is enjoyed by all and especially marketed to tourists who wish to sample the large variety of South African cuisine. In addition to food, music and dance feature prominently.
South African cuisine is heavily meat-based and has spawned the distinctively South African social gathering known as a braai. South Africa has also developed into a major wine producer, with some of the best vineyards in the world lying in valleys around Stellenbosch, Franschoek, Paarl and Barrydale.
There is great diversity in music from South Africa. Many black musicians who sang in Afrikaans or English during apartheid have since begun to sing in traditional African languages, and have developed a unique style called Kwaito. Of note is Brenda Fassie, who launched to fame with her song "Weekend Special", which was sung in English. More famous traditional musicians include Ladysmith Black Mambazo, while the Soweto String Quartet performs classic music with an African flavour. White and Coloured South African singers tend to avoid traditional African musical themes, instead preferring more European musical styles including such western metal bands such as Seether. Afrikaans music covers multiple genres, such as the contemporary Steve Hofmeyr and the punk rock band Fokofpolisiekar.
The country's black majority still has a substantial number of rural inhabitants who lead largely impoverished lives. It is among these people, however, that traditional dance and music survive; as blacks have become increasingly urbanised and westernised, aspects of traditional culture have declined. Urban blacks usually speak English or Afrikaans in addition to their native tongue. There are smaller but still significant groups of speakers of Khoisan languages which are not official languages, but are one of the eight officially recognised languages. There are small groups of speakers of endangered languages, most of which are from the Khoi-San family, that receive no official status; however, some groups within South Africa are attempting to promote their use and revival.
The white minority lead lifestyles similar in many respects to whites found in Western Europe, North America and Australasia.
Despite considerable discrimination under apartheid, Coloureds tend to relate more to white South African culture rather than black South African culture, especially Afrikaans-speaking Coloured people whose language and religious beliefs are similar or identical to white Afrikaners.
Asians, predominantly of Indian origin, preserve their own cultural heritage, languages and religious beliefs, being either Hindu or Sunni Muslim, and speaking English, with Indian languages like Tamil or Gujarati being spoken less frequently. Most Indians arrived on the famous Truro ship as indentured labourers in Natal to work the Sugar Cane Fields. There is a much smaller Chinese community in South Africa, although its numbers have increased due to immigration from Taiwan. Since the Taiwanese were classified as White, rather than Asian, under apartheid, they tend to be more culturally similar to whites in many ways than they are to other Asians.
Languages
South Africa has 11 official languages: Afrikaans, English, Ndebele, Northern Sotho, Southern Sotho, Swati, Tsonga, Tswana, Venda, Xhosa and Zulu. In this regard it is second only to India in number. While each language is technically equal to every other, English has emerged recently as the chief-among-peers as it is the most widely spoken language across racial barriers as well as globally, even though it is not the most widely spoken language by population. There are 11 official names for South Africa, one for each of the official national languages.
The country also recognises eight non-official languages: Fanagalo, Khoe, Lobedu, Nama, Northern Ndebele, Phuthi, San and South African Sign Language. These non-official languages may be used in certain official uses in limited areas where it has been determined that these languages are prevalent. Nevertheless, their populations are not such that they require nationwide recognition.
Many of the "unofficial languages" of the San and Khoikhoi people contain regional dialects stretching northward into Namibia and Botswana, and elsewhere. These people, who are a physically distinct population from other Africans, have their own cultural identity based on their hunter-gatherer societies. They have been marginalised to a great extent, and many of their languages are in danger of becoming extinct.
Many white South Africans also speak other European languages, such as Portuguese (also spoken by Angolan and Mozambican blacks), German, and Greek, while many Asians and Indians in South Africa speak South Asian languages, such as Hindi, Gujarati and Tamil.
Crime
Crime has been a major problem in South Africa. According to a survey for the period 1998 - 2000 compiled by the United Nations, South Africa was ranked second for assault and murder (by all means) per capita.[21] Total crime per capita is 10th out of the 60 countries in the data set. Nevertheless, crime has had a pronounced effect on society: many wealthier South Africans moved into gated communities, abandoning the central business districts of some cities for the relative security of suburbs. This effect is most pronounced in Johannesburg, although the trend is noticeable in other cities as well. Many emigrants from South Africa also state that crime was a big motivator for them to leave. Crime against the farming community has continued to be a major problem in the country.
Military
South Africa's armed forces, known as the South African National Defence Force (SANDF), was created in 1994. Previously known simply as the South African Defence Force (SADF), the new force consists of the forces of the old SADF, as well as the military forces of the organisations fighting for liberation, namely Umkhonto we Sizwe (MK), Azanian People's Liberation Army (APLA), and the former homeland defence forces. The SANDF is subdivided into four branches, the South African Army, the South African Air Force, the South African Navy, and the South African Military Health Services.
In recent years, the SANDF has become a major peacekeeping force in Africa, and has been involved in operations in Lesotho, the Democratic Republic of the Congo, and Burundi, amongst others. It has also participated as a part of multi-national UN peacekeeping forces.
South Africa undertook a nuclear weapons program in the 70s and may have conducted a nuclear test over the Atlantic in 1979, but has since renounced its nuclear program and signed the Treaty on the Non-Proliferation of Nuclear Weapons in 1991 after destroying its small nuclear arsenal. It is the only African country to have successfully developed nuclear weapons, and to date is the only country in the world to have voluntarily dismantled its entire nuclear weapons arsenal.
It has a strong military manufacturing sector. Especially strong conventional products include the G-series howitzers, combat engineering equipment, and light armored fighting vehicles. There has been significant co-development with Israel.
Media
South Africa has a large, free, and active press that regularly challenges the government, a habit formed during the apartheid era when the press was the medium least controlled by the government. Major scandals have erupted when the press reported charges of corruption that were proven to be true in cases such as that of Schabir Shaik, in which (then) deputy president Jacob Zuma was implicated, and the corruption allegations that led to the dismissal of Winnie Mandela from parliament. The government's stance on the 2005 Zimbabwe parliamentary elections and AIDS have also attracted plenty of coverage.
Even though South Africa now has the most sophisticated media network in Africa, it was one of the last countries in the world to allow television, with colour TV broadcasts commencing in 1975. By the end of apartheid in 1994, television networks covered all urban areas and some less populated areas, while radio networks covered almost all of the country.
During the Apartheid era the majority of commercial and all public-service radio stations and all of the television channels were operated by the South African Broadcasting Corporation (SABC), and were subject to strict control and censorship by the government, with a few independent regional stations allowed. The creation of the independent black homelands (or Bantustans) in the 1970s allowed for the establishment of TV and radio stations outside of the control of the apartheid Government. Following the demise of apartheid, the broadcasting industry was de-regulated with many of the commercial regional SABC radio stations and former Bantustan stations privatised and sold to companies and consortiums that were majority owned by black people. Three SABC television channels are in place at present.
An African language channel was introduced to the SABC in 1981 (during apartheid) with a second African language channel added later in the decade. The SABC's television monopoly was eventually challenged in 1986 when a new privately owned subscription television network, M-Net, was launched. M-Net was forbidden to operate a news service.
South Africa currently has two terrestrial free-to-air television networks (SABC and e.tv), one subscription based terrestrial network (M-Net), as well as has access to satellite television (DStv) which is operated by M-Net's owners, Multichoice. e.tv is allowed to operate an independent television news service. The SABC broadcasts news and entertainment channels Africa-wide via satellite.
References
André Kisalu Kiala, Le drame angolais, L'Hamattan, París, 2005, ISBN 2-7475-9485-8
Olivier Languetin, Cuba la fallite d'une utopie, Folio Le Monde Actuel, París, 2007, ISBN 978-2-07034598-4
Ross, Robert, Historia de Sudáfrica, Ediciones AKAL, Madrid, 2006, ISBN 978-84-460-2295-4
SouthAfrica.info: South Africa's geography
South Africa Online Travel Guide: Plants and Vegetation in South Africa
CIA World Factbook, "South Africa"
BBC News: Controversy dogs Aids forum
BBC News: South African split over Aids
African Security Review Vol 5 No 4, 1996: Strategic Perspectives on Illegal Immigration into South Africa
Queens College: The Brain Gain: Skilled Migrants and Immigration Policy in Post-Apartheid South Africa
Human Rights Watch, 2001. Unequal Protection: The State Response to Violent Crime on South African Farms ISBN 1-56432-263-7 http://www.hrw.org/reports/2001/safrica2/
Mohamed, Najma. 2000. Greening Land and Agrarian Reform: A Case for Sustainable Agriculture. In At the Crossroads: Land and Agrarian Reform in South Africa into the 21st Century. Ed. Cousins, Ben. Bellville, School of Government, University of the Western Cape. ISBN 1-86808-467-1
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South Africa's bitter harvest
BBC News: South Africans' long wait for land
BBC News: SA 'to learn from' land seizures
The Sunday Times Magazine: Farms of Fear
Reuters Alertnet: "Climate change to create African 'water refugees' - scientists", accessed Sept 21 2006
Department of Agriculture South Africa
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NationMaster: South African Crime Statistics
A History of South Africa, Third Edition. Leonard Thompson. Yale University Press. 1 March 2001. 384 pages. ISBN 0-300-08776-4.
South Africa: A Narrative History. Frank Welsh. Kodansha America. 1 February 1999. 606 pages. ISBN 1-56836-258-7.
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The Politics of the New South Africa. Heather Deegan. 28 December 2000. 256 pages. ISBN 0-582-38227-0.
Times Online[2]. April 2 2006.
Making of Modern South Africa: Conquest, Segregation and Apartheid. Nigel Worden. 1 July 2000. 194 pages. ISBN 0-631-21661-8.
Emerging Johannesburg: Perspectives on the Postapartheid City. Richard Tomlinson, et al. 1 January 2003. 336 pages. ISBN 0-415-93559-8.
"Religion and Politics in South Africa." David Hein. Modern Age 31 (1987): 21-30.
South Africa Government Online. Accessed 20 February 2005.
SouthAfrica.info. Accessed 12 February 2005.
South Africa war graves project
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