ZAR Forex Report

Is it a bird? Is it a plane? No, it is the Rand flying high after strengthening for four straight days!!

What a difference a week makes; fear gripped the markets again last week as investors looked to take profits as gains ran too far.

The GBP weakened 3% to the 1.29s against the USD and safe haven investments soared.

For the most part of last week, sentiment over Brexit remained the main driver and sentiment was negative. On Wednesday the ZAR traded around the 14.80 – 14.95 range against USD and just over 19.00 to the GBP.

Attention turned to the US Fed meeting on Friday. While the Fed has made it clear it will not look at raising interest in the near future due to Brexit uncertainty, expectations were that the US added 180,000 jobs in June – a figure that would keep markets pleased.
The actual figures came in much stronger than expected – the US added 287,000 jobs; confirmation that the US economy is not slowing down.

This figure did enough to boost investor confidence and emerging markets gained as a result and the ZAR closed at a strong 14.55 on Friday. Wall street indices excelled to record highs. All of a sudden Brexit fears seemed to dissipate.

It feels like everyone on the global playground is making friends with the Rand again; inflows continue at levels not seen since 1999 as foreigners have bought local stocks for 25 straight days.

It is very important to note though that foreigners are NOT buying SA stocks due to an optimistic outlook for the country, but rather due to the higher interest rates available.

SA’s growth outlook remains weak with some of the top forecasters expecting the ZAR to weaken to 17 to the USD by year end due to a Molatov cocktail of corruption, policies and a potential rise in US interest rates.

The gains in the ZAR have been impressive.

Caution is advised as investors could look at profit taking at some point or when a reversal occurs it could hit the Rand hard. On Tuesday the Rand opened at 14.42 against USD and 18.80 v GBP, while it broke below 16.00 v the Euro.

And finally, US citizens would be forgiven to think we are back in 1999 as history repeats itself: S&P is at an all-time high, US unemployment is under 5% again, oil is under $50 a barrel and Pokémon is again the number 1 selling game…

Have a great week.

ZAR FOREX RATES

USDZAR = 14.3313
GBPZAR = 18.8938
EURZAR = 15.9200
AUDZAR = 10.9316
NZDZAR = 10.4643
CADZAR = 10.9883
CHFZAR = 14.6080

Do you want to receive news alerts via WhatsApp? Send us a WhatsApp message with your name and surname to 061 718 4438.

Please read our WhatsApp broadcast list disclaimer.
Join us on BBM at 59015786
Join the conversation on Facebook, Twitter and Instagram.