ZAR Forex Report

We wouldn’t go as far as calling it a boring week in the market, but it certainly was a relatively, and well deserved, quiet week.

It was mentioned that the Rand’s reaction to the political arena in SA was a tad overdone and this was evident in the reversal as the ZAR weakened and reversed some if its gains.

On Wednesday the ZAR opened at 13.43 against the USD, after flirting with the key support level of 13.20.

Rand strength has primarily been driven by global markets, of course SA’s strong trade balance and changing political landscape plays a part, but the fact is that it looks unlikely that the US are to increase their interest rates any time soon.

This translates to more funds flowing to higher yielding markets and currencies – higher yielding and riskier, so when things change (and they will!) expect the markets to be volatile with quick and big movements.

On Friday, the Fed’s Stephen Fischer commented that the US was close to hitting its employment and inflation targets – this of course is positive news and the market acted as could be expected.

The USD strengthened as hopes of a rate hike increased, causing emerging market currencies to weaken.

The Rand was handed a reprieve on Monday as Brent oil dropped to below $ 49.00, which indicates that inflation is likely to remain stable. ZAR strengthened from around 13.60 on Monday (peaking at 13.65) to 13.46 on Tuesday.

The Rand is on track for another quiet (read boring) week as it keeps looking north, with no major data to be released.

Keep a look out for Germany’s GDP figures on Wednesday as well as SAPPI on Thursday and of course US Fed – Janet Yellen’s speech on Friday.

And finally…Coca Cola Beverages Africa expressed concern for the proposed new sugar tax which “could cost the industry 60,000 jobs”.

So please do your bit for the economy during this year’s Rugby Championship and have that extra Brandy and Coke…

Have a great week.

ZAR FOREX RATES

USDZAR = 13.5291
GBPZAR = 17.8316
EURZAR = 15.3317
AUDZAR = 10.3355
NZDZAR = 9.90704
CADZAR = 10.4732
CHFZAR = 14.0777

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