After beginning the local session under pressure the Rand was able to advance for the first time in several days as the South African unemployment rate declined unexpectedly.
The appeal of the emerging-market asset is still dampened by the three-week long platinum sector strike and the services protests which have occurred near major towns, but the unemployment report helped the Rand enjoy modest gains.
The unemployment rate in the commodity-driven currency fell from a revised 24.5 per cent in the third quarter of 2013 to 24.1 per cent in the final quarter of the year.
Economists had expected the jobless level to rise to 24.9 per cent.
The Rand was additionally boosted by the news that manufacturing production in South Africa surged by considerably more than expected.
Manufacturing output increased by 2.5 per cent in December, year-on-year, following an annual increase of 0.3 per cent the previous month.
A gain of 2.2 per cent had been forecast by economists.
The result was aided by a 5 per cent annual increase in food and beverage production and a 1.7 per cent increase in the production of chemical products and petroleum.
Although this was an upbeat report, the figures also showed that production in South Africa expanded by 1.3 per cent across the whole of last year, down from growth of 2.4 per cent in 2012.
Before the domestic data was published Absa Capital was quoted as saying; ‘Although some of these socio-political tensions might already be priced into the rand, we maintain that the rand remains vulnerable to headline risk over the medium term. These idiosyncratic concerns could ensure that the rand will struggle to rally significantly, even if sentiment towards emerging markets in general improves.’
However, while the Rand remained lower against the New Zealand Dollar, it rallied notably against the Pound and US Dollar, with the asset pushing below the 11 Rand per Dollar level.
The Pound was previously trading well following the release of a surprisingly strong UK retail sales report.
The Rand did modestly trim gains against the US Dollar after Fed Chairman Janet Yellen inferred that Fed fiscal policy should remain consistent, but still looked set to end the day in a stronger position than it began.
Over the next few days other South African reports to look out for include domestic retail sales figures and mining production data.
Tomorrow’s Bank of England inflation report will also trigger movement in the GBP/ZAR pairing.
South African Rand (ZAR) Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Pound Sterling,
,South African Rand,18.0917,
Euro,,South African Rand,14.9417,
US Dollar,,South African Rand,10.9856 ,
Australian Dollar,,South African Rand,9.8858,
New Zealand Dollar,,South African Rand,9.1773,
Canadian Dollar,,South African Rand,10.0235,
[/table]
Comments are closed.