ZAR Forex Report

After a disappointing August, September is looking refreshingly bright for the South African Rand.

Global market anticipation and nervousness is causing emerging currencies and especially the Rand, to do their best bouncing ball impersonations.

Swings of over 30 cents have been seen as global markets remain uncertain about the Fed’s rate policy.

USDZAR opened a few cents stronger on Wednesday after dropping to the lowest in a week due to global risk (14.43) following positive current account figures which came in close to expectations at 3.1% of GDP.

Volatility dissipated and we saw the Rand trade in a 20 cent range against the USD throughout the rest of the day – the lowest for the month.

Local political risk and global uncertainty has resulted in The Rand and Mexican Peso being the worst-performing major currencies over the past month, with declines of at least 6% against the USD in August.

Retail sales figures released last Wednesday suggested that the economy is slowing down again as sales figures failed to grow by even 1% year on year in July.

Moody’s also voiced their concern after funding to SOE’s have been cut by Futuregrowth amongst others – the market, however, did not see this as a surprise and it had little to no effect on the exchange rates.

Towards the end of last week the Rand gained massively as political risk seemed to drop.

It was one of three currencies to strengthen against the USD and gained as much as 4% when compared to other higher risk emerging market currencies.

The ZAR continued this strength on Monday, gaining as much as 1.2% and bringing the total gains in September to 5%.

Emerging markets are benefiting from the low interest rates in developed countries; economists are also still split on whether the Bank of Japan will increase their stimulus program this week; a move that will be positive for the higher yielding currencies.

At the time of writing, the Rand is on a four-day winning streak – strengthening to 13.90 versus the USD. Long may it continue…

Some important data out this week as focus turns to Japan for the BoJ monetary policy statement and interest rate tomorrow. Also out on Wednesday is SA CPI and a US Fed press conference, followed by US jobless claims and SARB interest rate on Thursday.

Have a great week.

ZAR FOREX RATES

USDZAR = 13.9027
GBPZAR = 18.0223
EURZAR = 15.5386
AUDZAR = 10.4906
NZDZAR = 10.2055
CADZAR = 10.5089
CHFZAR = 14.2143

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