The Pound to Rand to exchange rate was trading in the region of 18.1520 on Thursday.
The pairing was trading in a fairly narrow range and was little affected by the UK’s retail sales report.
On Wednesday the Rand was bolstered against almost all of its most traded currency counterparts following the release of some upbeat domestic reports.
South Africa’s currency rallied against the Pound and jumped by 1 per cent against the US Dollar as investors digested the news that South Africa’s current account deficit narrowed in the first quarter of the year.
The shortfall fell from 5.1 per cent to 4.5 per cent of GDP on a quarter-on-quarter basis despite the pressures exerted by the ongoing strike in the Platinum mining sector.
A separate report detailing a surprisingly strong increase in South African retail sales lent the Rand additional support.
Sales were up 1.8 per cent in April, year-on-year, following a revised annual increase of 0.8 per cent in March.
Month-on-month sales stagnated in April.
Rand movement was also enabled by the news that domestic consumer price inflation accelerated by more than expected in May. CPI advanced by 6.6 per cent year-on-year, upping the odds of the South African Reserve Bank hiking interest rates this year.
Overnight the Federal Open Market Committee also issued its policy statement.
As the tone of the statement was more dovish than many industry experts had expected, the US Dollar eased lower and emerging-market assets like the Rand advanced. The FOMC intimated that even with US inflation rising more rapidly than projected interest rates would be left on hold for some time to come.
However, some industry experts believe that the Rand’s recent show of strength could prove short lived. In the view of Rand Merchant Bank trader Ian Martin; ‘There is just so much uncertainty in the South African economy and in the US data lately, that the market will probably remain nervous. But anything above 11.0000 for the Rand and the central bank will become concerned’.
Today’s UK retail sales report confirmed that sales declined by 0.5 per cent in May, the first monthly sales drop since January.
With economic reports for South Africa limited for the rest of the week, any additional movement in the GBP/ZAR pairing may be caused by the UK’s public finance figures.
A positive result could help the Pound regain a firmer footing before the weekend.
Updated June 20th, 2014 at 16:35
The Pound Sterling to Rand exchange rate was 0.62% softer on Friday as investors rediscovered their appetite for higher risk assets in spite of ongoing tensions in Iraq and fears that the situation could escalate further.
The Pound was fairly unmoved for much of Friday, even as UK figures showed a larger-than-anticipated budget deficit. The Rand, meanwhile, was still deriving support from the fact that the Federal Open Market Committee plans to leave interest rates on hold. This week’s surprisingly upbeat economic reports for South Africa also boosted the emerging market currency.
In the view of one locally-based currency trader; ‘South African assets still offer some great emerging market value and we expect real money flows to continue. No major data out today so technicals and flow should determine trajectory’.
South African data to be aware of next week includes the nation’s producer price index. In the following week trade balance, consumer confidence and manufacturing figures will all be of note.
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