Every week on Tuesday North Coast Courier will post a ZAR Forex/Currency report “supplied by Exchange4Free”, a proudly local based foreign exchange company and currently employ 25 local residents – and growing.
The problem with April Fool’s Day in SA is that one is never quite sure whether you’re being pranked, or if it is the actual truth. While President Zuma has been found to have acted against the constitution, he has subsequently apologised and peace, order, happiness and rainbows have been restored…after a Rand rally, our biggest risk continues to be political.
At the start of last week there was some positive news for global emerging markets as equities rallied the most since May 2009, led by commodity stocks. This helped emerging market currencies post a good month.
The Rand kept this appreciation through to midweek as the trade gap narrowed and US Federal Reserve Chairperson, Janet Yellen, delivered a speech at the Economic Club of New York.
Her comments were interpreted as “dovish” – meaning the Fed Reserve are unlikely to take aggressive action and interest rates are likely to remain unchanged. This helped the ZAR, amongst other higher yielding (riskier) currencies, to strengthen further.
The Constitutional Court ruling would have definitely helped ZAR optimism as it proved we still have a sound and democratic constitution.
By the time of writing though, the Rand Rally has all but been reversed as the honeymoon didn’t make it through the weekend and it seems that little will change. Add to that last night’s Monetary Policy Review stating that growth prospects remain weak and inflation high (not to mention great possibility of a downgrade), we can expect the ZAR to weaken further.
A high chance of interest rate hike due to high inflation could help the Rand strengthen somewhat.
The Rand is expected to remain volatile and is looking for direction; tomorrow we will see the US Fed Reserve’s comments followed by the ECB meeting and President Draghi’s speech on Thursday.
ZAR FOREX RATES
10:24 am (UCT+2 Time)
USDZAR = 14.9166
GBPZAR = 21.2192
EURZAR = 16.9488
AUDZAR = 11.2909
NZDZAR = 10.1141
CADZAR = 11.3666
CHFZAR = 15.5391
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