ZAR Forex Report

After a strong week, the ZAR was weaker by as much as 1% on Monday as the oil price dropped and investors traded out of their Rand positions.
Foreign investments into SA have been quiet compared to the last two weeks.

The disappointment of an oil meeting where no agreement was reached for a production freeze, spilled over into global markets at the start of last week.

The oil price remained one of the key drivers as the price recovered and risk aversion dropped, strengthening emerging currencies such as the ZAR. Capital inflows remained a huge positive with heavy buying of local bonds by foreigners. The ZAR dropped as low as 14.15 against the USD.

On Wednesday the latest inflation figures were released – headline inflation came down from 7% year on year for Feb to 6.3% yoy for March.

Food prices are on average 10% more than a year ago, with fruit and veg showing the biggest increase in price – 18.7% more expensive than March 2015.

The ECB meeting last week can be described as “lukewarm”, with not no real direction and fairly dovish comments, meaning interest rates will probably remain low. Naturally, this didn’t have much effect on the markets. Again, oil was the main driver and Wall Street slid off near record highs as the oil price dropped to below $45 per barrel, not helping the Rand whatsoever.
This, combined with the closure of many “long” investor positions, saw the ZAR weaken late on Friday.

After appreciating as much as 2.5% against the USD last week, the ZAR slipped on Monday as the market looks towards the Fed meeting and a US interest rates decision later this week. According to Bloomberg data, there’s a 63% chance the Fed will boost its benchmark rate this year – up from 50% odds in mid-April.
Tomorrow (Wednesday) is a public holiday in SA, with today also very quiet in the market – the ZAR, along with global markets, will be awaiting news from the Fed statement on Wednesday for further direction. This means that when you are back at work on Thursday, a sizeable up or down move is highly possible.

Lastly, spare a thought for the ex-MTN Chief Executive Officer who, after steering the telecoms ship into a $5.2bn Nigerian fine, was awarded a R23.7m pay-out to resign. Shame.

All eyes are on the US Federal Open Market Committee’s rate decision on Wednesday and to a lesser extent the CPI figures from Europe on Friday.

ZAR FOREX RATES

11:09 am (UCT+2 Time)

USDZAR = 14.4813
GBPZAR = 21.0987
EURZAR = 16.3545
AUDZAR = 11.2067
NZDZAR = 9.97931
CADZAR = 11.4564
CHFZAR = 14.8692

Every week on Tuesday North Coast Courier will post a ZAR Forex/Currency report “supplied by Exchange4Free”, a proudly local based foreign exchange company and currently employ 25 local residents – and growing.

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