ZAR Forex Report
News that the Hawks are looking to arrest Pravin Gordhan sent the markets tumbling.
It has long been said that the biggest risk the ZAR faces is politics.
One would be forgiven to think that there “is no chance” that the ZAR would weaken from 15.30 vs USD at close of play on a Friday to over 15.70 on Monday morning…
Looking back, it is always easier connecting the dots; we saw a big ZAR sell off on Tuesday and even Wednesday last week, with no real driver (up until now?) – the losses, fortunately, were short lived as Wall Street had its best day in two months, which helped the Rand and other emerging markets improve.
With event risk being low and not much data being released during the middle of last week, the Rand stabilised somewhat.
It was expected that the ZAR would strengthen, but sentiment remained low, Wall Street reversed slightly and renewed pressure kept the Rand trading range bound.
Over the weekend the Sunday Times reported that the Hawks are looking to arrest Pravin Gordhan, for his alleged role in “espionage” with regards to a case related to the activities of SARS.
Given our recent history (remember Nenegate?), and the sensitivity of the unpredictable beast we call the Rand, the news sent the markets tumbling.
Government bonds were down on Monday and the Rand hit a two month low; on Monday it was the worst performing currency in the world, bar the Venezuelan Bolivar.
It went as high as 15.74 vs the USD before recovering and closing 1.5% down at 15.63 – an official statement from The Presidency denying the report / rumours, helped the ZAR recover somewhat.
Brent Crude oil gained as much as 2.5% on Monday and commodities rose, which also assisted emerging markets and the Rand.
From a data perspective, local politics will play second fiddle to US data as CPI, average weekly earnings, industrial and manufacturing production are all being released this afternoon.
…And finally, ABSA’s (Barclays Africa) CEO Maria Ramos generated more profit for every unit of pay last year than any of her South African peers, including Investec’s Stephen Koseff.
Investec, incidentally, is mentioned 24,062 times in Panama Papers…
Have a great week; let’s make it rain.
ZAR FOREX RATES
USDZAR = 15.6487
GBPZAR = 22.6782
EURZAR = 17.7276
AUDZAR = 11.4633
NZDZAR = 10.6438
CADZAR = 12.1250
CHFZAR = 16.0001
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