With influential domestic data thin on the ground and the growing prospect of central banks increasing stimulus in an attempt to boost global growth, the Rand was able to post a modest gain against its American counterpart for the first time in three days.
At the current exchange rate 1 US Dollar will purchase 9.1307 South African Rand as of 14:14 GMT
Since gaining against the US Dollar the Rand has trimmed its weekly drop to 2.4 per cent, but it’s still the commodity-driven currencies worst five-day slump since October 2012.
The Rand’s losses were triggered on Monday after data showed that China’s economy grew by less-than-anticipated, exacerbating concerns about the world’s second largest economy and causing the price of commodities like gold to crash.
The South African Consumer Price Index also revealed lower inflation than expected, lessening the odds of the nation’s central bank issuing a rates cut.
Although the Rand strengthened slightly after the publication of better-than-anticipated South African retail sales data, gains were limited as industry experts expect the figure to drop in the months ahead due to consumer confidence levels falling to a nine-month low in the first quarter of this year.
With foreign investors purchasing 561 million Rand of South African bonds yesterday, the Rand advanced to 9.1529 against the US Dollar today. The currency could strengthen further if inflation pressures continue to give global central banks more scope for policy alterations.
As analyst Quinten Bertenshaw observed: ‘With central banks committed to reflating their respective economies, the news of moderating inflation abroad means that the central banks will now have more room to keep monetary policy at extremely accommodative levels or even loosen further. Inflows into bonds have also improved recently and remain strong for the month of April.’
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