ZAR Forex Report

A little goes a long way…

Last week Wednesday, ZAR opened slightly weaker at 14.35 against the USD; 15.78 and 18.84 against the euro and sterling respectively before the US Fed meeting where the statement sounded a tad more positive than expected, however the market expected the statement to be slightly more aggressive and hawkish.
The result was a stronger gold price and the ZAR also strengthened slightly, helped by the SABMiller/AB InBev deal.

Following the Fed meeting, global markets looked towards Japan where it was expected that the Bank of Japan would increase stimulus and accelerate spending. The decision went against market expectations and the BoJ announced that there’ll be no changes, resulting in a gain in commodity prices. The Rand followed suit as the gold price increased and strengthened to levels last seen in November 2015 – 14.09 against the USD.

After a record trade surplus in May, South Africa recorded another monthly trade surplus in June as exports of vegetable related products rose, while oil imports also climbed. This takes the total surplus for 2016 to 12.5 billion rand compared with a deficit of 22.95 billion rand for the same period last year.
This positive news caused the ZAR to break the elusive 14.00 mark against the USD, flirting with 13.80 in trading levels not seen this year.

The Rand was forecasted to be the worst performing emerging market currency this year – this has proved to be the exact opposite. The ZAR has strengthened as much as 4.9% against the USD post Brexit. This is enough to rank it the top performing currency tracked by Bloomberg, bringing its gains to 11% for the year. It is important to note that with a slowing economy, the odds are still stacked against the ZAR…

This week the Rand is expected to be fairly volatile as the nation goes to voting polls on Wednesday, while trade in the rest of the world carries on. Some fairly important data will also be released; SA’s purchasing manager’s index today and net reserves on Friday. Bank of England rates on Thursday as well as US initial jobless claims

Have a great week and if you’re in SA, please go and vote.

ZAR FOREX RATES

USDZAR = 13.9750
GBPZAR = 18.4928
EURZAR = 15.6528
AUDZAR = 10.5755
NZDZAR = 10.0920
CADZAR = 10.6649
CHFZAR = 14.4698

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