The Rand began the week in a slightly stronger position against peers like the Pound and US Dollar as an encouraging manufacturing report for China increased risk-appetite overnight.
The Pound Sterling/Rand exchange rate is currently in the region of 16.6824 as of 10:45 GMT
While Sterling enjoyed a bullish relationship with the majority of its most traded peers and posted widespread gains in the wake of strong UK manufacturing PMI, the Rand valiantly attempted to hold its ground as a measure of South African manufacturing climbed from 50.7 in October to 52.4 in November.
The result was well above the fifty mark separating expansion from contraction and supported South Africa’s growth outlook, proving that the manufacturing sector is recovering from strikes and employment is improving.
Kagiso’s manufacturing report stated; ‘The outlook for the sector remained positive, even though the index for expected business conditions in six months’ time declined somewhat compared to October’s high level. The index fell from 62.2 to 59.8 index points. However, the PMI leading indicator (the ratio between new sales orders and inventories) remained below 1. A level below 1 implies that inventories were relatively high compared to demand for manufactured demands. It should be noted that the indicator did improve compared to the previous month.’
The GBP/ZAR exchange rate hit a low of 16.4846 Rand per Pound
However, Rand gains were limited ahead of the release of South Africa’s influential current account data.
Economists are expecting that South Africa’s current-account deficit narrowed in the third quarter of the year.
If the deficit did indeed ease from 6.5 per cent of GDP in the second quarter to 6 per cent of GDP in the third, as forecast, it would relieve some of the pressure on the Rand’s exchange rate.
But in spite of this estimate, economist Gina Schoeman stated; ‘The current account deficit is likely to remain persistently wide until exports recover meaningfully and/or imports pull back significantly.’
The Rand was also restrained against the Pound as the British asset broadly strengthened in reaction to UK house prices increasing on a national basis and domestic manufacturing PMI jumping to 58.4 in November.
With UK services PMI forecast to show expansion tomorrow the Pound could extend gains against the Rand as the week progresses.
That being said, the USD/ZAR pairing may dip further if today’s measure of US manufacturing shows a decrease from 56.4 to 55.1.
Current South African (ZAR) Exchange Rates:
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The US Dollar/South African Rand Exchange Rate is currently in the region of: 10.1789 >
The Pound Sterling/South African Rand Exchange Rate is currently in the region of: 16.6824 >
The Euro/South African Rand Exchange Rate is currently in the region of: 13.7319 <
The Australian Dollar/South African Rand Exchange Rate is currently in the region of: 9.2546 >
The New Zealand Dollar/South African Rand Exchange Rate is currently in the region of 8.2438 >
The Canadian Dollar/South African Rand Exchange Rate is currently trading in the region of 9.5547 <
(Correct as of 10:45 GMT)
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