Pound (GBP) to South African Rand (ZAR) Exchange Rate Lower as Risk Returns to the Menu

After broadly declining yesterday as a risk-off environment prevailed, the Rand was able to recover ground as local trading progressed.

The Rand strengthened against the US Dollar and edged higher against the Pound.

Although investors continue to focus on developments in the Ukraine, the urgency of the situation has faded slightly since yesterday and investors are enjoying a renewed interest in higher-risk assets like the Rand.

As Russian President Vladimir Putin ordered troops to return to base following a military exercise, currencies like the Rand were able to push higher.

The situation might be far from resolved, but in the opinion of one industry expert, as ‘the world becomes accustomed to the new and/or existing realities, investors are likely to classify the Ukraine-Russia stand off as ‘a local issue’. Global financial markets will then return to focusing on key fundamentals, such as the improving trend in US economic data, rather than to what is happening in Ukraine.’

The Rand strengthened against the Pound even as the British asset was modestly supported by the news that the UK’s construction sector enjoyed another month of strong growth.

While the pace of UK construction output slowed slightly in February, the gauge still remained above 60 (clear of the 50 mark separating growth from contraction) and job creation in the sector was at its strongest for three months.

Little South African data is scheduled for publication this week (aside from Friday’s foreign exchange reserves report) so Rand movement will largely be the result of global economic developments.

Tomorrow further GBP/ZAR fluctuations may be driven by the UK’s services PMI, although Sterling volatility is likely to be a little stilted ahead of Thursday’s Bank of England rate decision.

As the Rand tracks the Euro, Eurozone services, retail sales and growth data may have an impact on the emerging-market currency.

The US non-manufacturing composite gauge will also be of interest, as will the nation’s ADP employment change figure.

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,17.9574,
Euro,,South African Rand,14.8027,
US Dollar,,South African Rand,10.7825,
Australian Dollar,,South African Rand,9.6411,
New Zealand Dollar,,South African Rand,8.9368,
Canadian Dollar,,South African Rand,9.7522,
[/table]