For the first time in several days the Rand was able to climb modestly against several of its rivals. The South African currency was steady as the European session opened after gaining support from a rebound in commodity prices and speculation surrounding today’s Bank of England and European Central Bank rate decisions.
At the current exchange rate 1 Pound will purchase 15.3321 South African Rand as of 10:40 GMT
As the possibility of the US Federal Reserve tapering stimulus has adversely affected commodity-driven and emerging market assets, some assurance from ECB President Mario Draghi that there is no intention to rein in easing in the Eurozone at the present time could support the Rand.
Although economists are forecasting that the ECB will opt to leave its benchmark rate at the current level of 0.5 per cent, a record low, the policy statement accompanying the decision is likely to inspire market movement.
However, with US markets closed for July 4th celebrations fluctuations will be limited, and industry experts are expecting the Rand to have a fairly range-bound day.
As Johannesburg-based currency analyst John Cairns notes: ‘Event risk today comes from the ECB meeting which could generate some mild volatility. Expect mostly talk but it is possible they may hint at rate cuts or even a move towards giving formal guidance on the future trajectory of policy.’
But with the influential US non-farm payrolls report out tomorrow Absa Capital are expecting the Rand to remain under pressure and experience further weakness.
In a morning report the financial institution asserted: ‘It is hardly surprising to see that Rand bulls trimmed a few more of their positions yesterday ahead of Thursday’s US public holiday and ECB meetings, given that global forces continue to drive the Rand’s direction at the moment. Heightened global risk aversion, stemming from Egypt and Portugal, would not have been supportive of risky assets such as the Rand either. Yesterday’s US ADP employment report proved to be better than expected, and if the remainder of this week’s US labour data proves better than expected, risky assets are likely to incur further selling pressure because such an outcome would be supportive of the Fed scaling back its quantitative easing measures.’
In other South African news, Reuters econometer for the nation came in at 256.3 in July, the same as the previous month. In June the econometer fell to 256.3, marking a fifth consecutive month of declines.
While tomorrow’s US news is likely to be the main catalyst of Rand movement, additional fluctuations could result following the publication of South African foreign exchange reserves data.
Current South African (ZAR) Exchange Rates:
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The US Dollar/South African Rand Exchange Rate is currently in the region of: 10.0420 <
The Pound Sterling/South African Rand Exchange Rate is currently in the region of: 15.3321 <
The Euro/South African Rand Exchange Rate is currently in the region of: 13.0515 <
The Australian Dollar/South African Rand Exchange Rate is currently in the region of: 9.1797 >
The New Zealand Dollar/South African Rand Exchange Rate is currently in the region of 7.7764 >
The Canadian Dollar/South African Rand Exchange Rate is currently trading in the region of 9.5583 >
(Correct as of 10:40 GMT)
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