ZAR Forex Report

Calling last round…

After climbing to a 5 week high following the US presidential debate and massive ZAR inflows from the SABMiller deal, the Rand stumbled somewhat – declining more than any currency against the USD by midway through last week.

Adding to the ZAR’s woes is the Deutsche Bank-led global risk aversion.

The largest German lender’s stock dropped to record lows last week and bounced in volatile trade as investors are concerned about the bank’s capital position and as it faces the US Department of Justice’s demand for a $14 billion settlement.

Fears of a situation similar to 2008 have been ignited after Chancellor Merkel has already commented that the government will not bail out the bank.

OPEC also agreed to start limiting oil supplies, although no specifics have been set and coming to an agreement could take months as each nation will have their own interests at heart.

A higher oil prices is not only bad for consumers, but also for the country as SA is a net importer.

SA trade figures were released on Friday, and while in the short term there was a R8.6 billion rand trade deficit for August, the total for the first eight months of 2016 is a surplus of 7.4 billion compared to a shortfall of 35.1 billion in the same period last year.

The market was expecting a bigger deficit and the Rand rested positively; strengthening by 0.7% to 13.79 against the USD.

In other “positive” news; speculation is growing that the NPA will drop charges against Minister Pravin Gordhan.

SA and the ZAR remains a high yielding investment compared to other nations, foreigners will welcome reduced local risks.

The Rand opened at 13.65 against USD on Tuesday; slightly stronger as it awaits the final UK court approval of the SABMiller deal.

Inflation slowed to 5.9 percent in August, the lowest rate this year and the Rand has gained 14% against the USD – data which led the Reserve Bank Deputy Governor to comment that interest rate cuts are not far away.

Keep an eye on the market on Friday afternoon with the US unemployment rate and change in non-farm payroll.

This will give some clues as to when the Fed will start increasing interest rates.

In other news; SAB called last round as it had its last trading day on the JSE last week after it first listed in 1897.

End of an era and no doubt many a tear was shed and glass was raised.

Have a great week.

ZAR FOREX RATES

USDZAR = 13.6119
GBPZAR = 17.3523
EURZAR = 15.2021
AUDZAR = 10.4384
NZDZAR = 9.91488
CADZAR = 10.3405
CHFZAR = 13.9033

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