The Rand was able to strengthen against its US counterpart yesterday after a report showed that South Africa’s trade deficit narrowed by more than expected, but since then the currency has moderately weakened ahead of the Federal Reserve’s influential policy meeting.
At the current exchange rate 1 US Dollar will purchase 9.0073 South African Rand as of 11:00 am GMT
The figures compiled by the South African Revenue Service revealed that a boost in metal exports allowed the nation’s shortfall to drop from 9.5 billion Rand in February to 7.8 billion Rand in March.
Economists forecast that the gap would narrow to 8.5 billion Rand.
After the report was published the Rand strengthened to 8.9526 Rand per Dollar.
The commodity-driven South African currency has also been supported in recent days by the expectation that major central banks will stick with fiscal stimulus measures in an attempt to drive global growth.
As industry expert Theuns de Wet stated: ‘Disappointing global growth indicators and falling inflation in most of the major world economies will almost certainly prompt further policy easing. Ongoing and expanding monetary and fiscal stimulus in most of the developed world should support risky currencies.’
It is expected that the Federal Reserve will respond to the recent run of disappointing US data by continuing with its extensive bond buying programme when the FOMC’s two-day meeting ends tomorrow. Some industry experts are even expecting the central bank to hint at the possibility of stepping up stimulus.
Similarly, the odds of the European Central Bank issuing a rate cut following tomorrow’s policy meeting increased after unemployment in the Eurozone reached a record high of 12.1 per cent.
The Rand could climb if the FOMC and ECB take the steps forecast, but as Credit Suisse strategist Bernd Berg observes: ‘Global growth concerns and weak domestic data may trigger renewed bouts of selling pressure on the Rand [which would] negatively impact the performance of South African local-currency bonds.’
Last month the Governor of the Reserve Bank of South Africa, Gill Marcus, asserted that the Rand could push inflation beyond the 3-6 per cent target temporarily, and that the Rand remains a threat to consumer prices.
Current South African Rand (ZAR) Exchange Rates
< Down > Up
The South African Rand/US Dollar Exchange Rate is currently in the region of: 0.1115 <
The South African Rand/Euro Exchange Rate is currently in the region of: 0.0844 <
The South African Rand/Pound Sterling Exchange Rate is currently in the region of: 0.0716 <
The South African Rand/Australian Dollar Exchange Rate is currently in the region of: 0.1076 <
The US Dollar/South African Rand Exchange Rate is currently in the region of: 9.0073 >
The Pound Sterling/South African Rand Exchange Rate is currently in the region of: 13.9823 >
The Euro/South African Rand Exchange Rate is currently in the region of: 11.8583 >
The Australian Dollar/South African Rand Exchange Rate is currently in the region of: 9.3091 >
The Canadian Dollar/South African Rand Exchange Rate is currently in the region of: 8.8882 >
(Correct as if 11:20 am GMT)
Comments are closed.