ZAR Forex Report

Where do we start? Like a bad hangover, the Rand’s woes have mostly been self-inflicted.

Sadly, the party just does not seem worth it…

The squabble between Pravin Gordhan and the Hawks has been well documented – the Finance Minister was requested to report to the investigation unit’s office regarding an enquiry into SARS, which Mr Gordhan led from 1999 to 2009.

This raised fears of a widening rift between him and the President and another “Nene-gate”.

The ZAR lost over 7.5% against the USD by last week Wednesday, before dropping another 1.7% as it reached its weakest levels in seven weeks following the announcement from Futuregrowth Asset Management, SA’s biggest private fixed-income money manager, that it will no longer lend money to state-run enterprises.

Since this announcement, other lenders have come out and voiced the same statement.

The ZAR declined for a ninth day, trading at 14.72 against the USD, and was the worst performing currency – amazingly, or rather frustratingly, it was the longest losing streak since May 2013.

Even more worrying is that selling ZAR and buying Russian Ruble is one of the hot trades at the moment! Political risk much?

Spring in SA, and eventually some well needed good news as the ZAR gained for the first time in 10 days as figures from China showed manufacturing has increased to the highest levels in almost 2 years.

At this point it is impossible to tell if the gains are sustainable, but it certainly is a fresh and welcome boost for commodities and the Rand.

Late on Friday through to Tuesday the Rand strengthened, adding 0.7% as emerging-market stocks showed their biggest two-day gain in four weeks and currencies strengthened as disappointing US jobs data reduced speculation that the Fed will raise rates anytime soon.

The Rand opened at 14.60 to the USD on Friday and closed at 14.47.

A lot of the ZAR gains have been a result of global data – particularly weak data from the US. US non-farm payrolls climbed by 151,000 workers, less than the 180,000 figure that was expected.

Monday was a bank holiday in the US (Labour Day) and markets were very quiet.

The Rand is still looking for direction both locally and from the US.

Look out for Euro GDP on Tuesday as well as China CPI data on Friday this week.

And finally…the Pound Sterling has climbed to its strongest level in almost 2two months. Just as the summer holidays are coming to an end…

Have a great week.

ZAR FOREX RATES
11:30 am (UCT+2 Time)

USDZAR = 14.2221
GBPZAR = 18.9540
EURZAR = 15.8770
AUDZAR = 10.8665
NZDZAR = 10.4471
CADZAR = 11.0266
CHFZAR = 14.5119

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