ZAR Forex Report

Now that the Brexit hangover is slowly fading; Global Markets are stabilising and bouncing back as investor risk appetite seems to return – good news for emerging markets such as the Rand.

While risks in the UK remain – the nation, political parties, football team and even Top Gear now remain leaderless – GBP seems to have stabilised, although at much lower levels than before the referendum result. While asset prices bounced back, the ZAR started last week on the back foot, having lost almost 4% by Wednesday.

By Thursday last week, the ZAR opened at 14.80 – some 3% weaker than a week ago pre-Brexit and it has recovered all its losses against EUR and of course was “stronger” against the GBP, due to GBP losing over 10% in all this drama. The main benefactors are USD and gold as both have increased drastically as investors fled risky assets for safer havens.

Out of the ashes a phoenix will rise; this was in SA’s surprise trade surplus of over R 17 billion in May – the largest monthly surplus on record and exceeding the R 4.1 bn expectation. Before we get too excited, trade balances are usually measured in months of 3, but this certainly is a good sign. On the same day, news came that the Competition Commission has approved the SABMiller deal which further polished the ZAR’s armour.

The Rand reversed the week’s losses and strengthened more than 3.5% against the dollar and reached its peak on Monday before the latest job data showed that SA cut 15000 jobs in the formal non-agricultural sector during January to March this year.

On Tuesday morning Emerging Markets ended a five-day rally as investors locked in their recent gains and demand for riskier investments faded. We often see this trend where some investors take their profit and the market is flooded with stock, causing an oversupply and drop in price. The Rand slid 1.4 % – the most among 31 major currencies amid weaker Asian markets and the poor job data.

And finally, applications are welcomed for the role of SA’s Public Protector. Outgoing Protector, Thuli Madonsela’s term ends in October this year and so far 59 people have agreed to stand for the R 2.24m salaried job.

Have a great week.

ZAR FOREX RATES

USDZAR = 14.7529
GBPZAR = 19.3991
EURZAR = 16.4404
AUDZAR = 11.0643
NZDZAR = 10.6248
CADZAR = 11.4264
CHFZAR = 15.1860