The South African Rand fell to a six-week low against the US Dollar and the majority of its most traded peers after data showed that inflation in the country accelerated quicker than expected over the 12 months leading to July.
Inflation in South Africa’s biggest economy increased to 6.3% in July, up from the 5.5% recorded in June, smashing through the Central Banks 3% to 6% target for the first time in 15 months. Economists had been expecting a 6.2% rise.
According to Statistics South Africa prices increased due to an increase of 84 cents per litre in the price of petrol. Increases in the cost of water and electricity tariffs enacted by utility companies also took a heavy toll.
The Rand is suffering from the same weakness as other emerging and commodity based currencies as speculation over the US Federal Reserve’s possible tapering of its monetary easing programme weighs heavily upon riskier assets. Foreign investors have increased the pace of their withdrawals of cash from those countries.
“The main uncertainty and driving force behind the sell-off has been and will continue to be the uncertainty surrounding Fed policy and the impact of tapering on capital flows,” Carmen Nel, a Cape Town-based analyst at Rand Merchant Bank, said in e-mailed comments. “While most commentators note that tapering should not have a meaningful impact, market sentiment does not reflect this benign perspective.”
Also weighing upon sentiment is concern over ongoing labour disputes in the mining and automobile sectors.
Current South African (ZAR) Exchange Rates:
The US Dollar/South African Rand Exchange Rate is currently in the region of: 10.2314 >
The Pound Sterling/South African Rand Exchange Rate is currently in the region of: 16.0292 >
The Euro/South African Rand Exchange Rate is currently in the region of: 13.7018 >
The Australian Dollar/South African Rand Exchange Rate is currently in the region of: 9.2206 <
The New Zealand Dollar/South African Rand Exchange Rate is currently in the region of 8.0841 <
The Canadian Dollar/South African Rand Exchange Rate is currently trading in the region of 9.8003 <
(Correct as of 12:25 pm GMT)
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