The Pound (GBP) to South African Rand (ZAR) was trading close to a 1-month high on Thursday as concerns over the Scottish Independence vote eased and as South African data came in below economist expectations.
A poll published overnight saw support for the pro independence Yes campaign ease and the pro-Union No opposition took the lead with 53%.
Concerns that the UK could break up after next week’s vote were the main cause for the Pounds sharp decline earlier in the week; however, with the vote’s outcome in doubt and signs that the UK economy is still performing strongly the currency managed to regain some ground.
The South African Rand fell against most of its major peers as expectations that the US Federal Reserve will raise interest rates sooner than anticipated weighed heavily upon commodity and emerging market assets.
Domestic economic data releases also weakened the currency. First up was the latest mining output data.
According to Statistics South Africa, mining production tumbled by -7.7% on a year on year basis in July, worse than the previous months revised figure of -5.4%. The cause was the several month long strikes in the nation’s platinum mining sector.
On a month on month basis production improved from the preceding months revised figure of -1.1% to 0.4% as those striking miners returned to work and productivity.
‘Where oh where is the growth in South Africa? Despite the end of the (platinum) strike, output is still deeply negative year on year, including in July, So after a disastrous Q1 and Q2 contribution to GDP, mining’s contribution to GDP growth in Q3 is not looking especially good,’ said Razia Khan, head of Africa research at Slandered Chartered.
Manufacturing production fell sharply in July due the damaging impacts of a strike by steel and engineering workers over the month.
According to the data, manufacturing production fell by -7.9% on an annual basis, the sharpest contraction seen since October 2009, it was also a sharp drop from the 0.2% increase seen in June. On a month on month basis, manufacturing production declined by 3.6% from June to July.
Production of basic iron and steel, non-ferrous metal products, metal products and machinery fell by -20.4% and contributed -4.1% to the overall figure; motor vehicles, parts and accessories and other transport equipment fell by -29% and contributed -2.9%; and petroleum, chemical products, rubber and plastic products (-5.3% and contributing -1.2% respectively.
Pound Sterling to South African Rand exchange rate forecast
Sterling is forecast to remain volatile against the Rand and other peers right the way up until the Scottish Referendum vote on September 18. All it would take to send the Pound reeling again would be another opinion poll showing that the pro-independence side was winning.
The Rand meanwhile is likely to remain under pressure as speculation as to when the US Central Bank will raise interest rates continues.
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,17.7987 ,
Euro,,South African Rand,14.1788 ,
US Dollar,,South African Rand,10.9562 ,
Australian Dollar,,South African Rand,9.9796 ,
[/table]
