As the local session began the Rand was trading in a tight range against peers including the US Dollar and Pound as investors braced themselves for the highly anticipated Federal Open Market Committee meeting, at which months of speculation regarding the tapering of quantitative easing could be brought to an end.
The Pound Sterling/Rand exchange rate is currently in the region of 15.6385 as of 12:30 GMT
Yesterday the Rand advanced on the Pound and US Dollar as commodity-driven assets were supported by the news that the Federal Reserve is likely to be taken over by a hawkish Chairman when Ben Bernanke steps down in January.
As one local trader pointed out, it’s ‘amazing how sentiment has changed in two short weeks. At the end of August there was all the talk about ‘submerging markets’ and the Rand was at 10.50 per Dollar, and now we are 70c stronger and all the talk is once again about emerging markets.’
However, as European trading continued and UK inflation was showed to have slowed to 2.7 per cent in August, as expected by economists, the Rand softened slightly against the Pound.
The South African asset also fell against the US Dollar for the first time in three days as investors speculate on the outcome of the FOMC meeting as well as tomorrow’s domestic inflation report.
The GBP/ZAR exchange rate hit a low of 15.4948 Rand per Pound
The report is expected to show that the inflation rate in South Africa rose beyond the Reserve Bank’s target of 3-6 per cent in August. If accurate, inflation will have been above target for two consecutive months.
In response to the Rand edging away from a five-week high against the US Dollar, one Johannesburg-based industry expert commented; ‘The Rand remains vulnerable to tougher global funding conditions and the risk to the currency remains skewed towards further weakness. The market will probably start looking towards the FOMC decision. We would therefore expect the rally of the last few days to start to lose some steam.’
This afternoon’s US inflation data could trigger additional USD/ZAR movement, while Thursday’s Reserve Bank of South Africa rate decision is also likely to keep pressure on the Rand in the days ahead.
Current South African (ZAR) Exchange Rates:
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The US Dollar/South African Rand Exchange Rate is currently in the region of: 9.8325 >
The Pound Sterling/South African Rand Exchange Rate is currently in the region of: 15.6385 >
The Euro/South African Rand Exchange Rate is currently in the region of: 13.1452 >
The Australian Dollar/South African Rand Exchange Rate is currently in the region of: 9.1889 >
The New Zealand Dollar/South African Rand Exchange Rate is currently in the region of 8.0193 <
The Canadian Dollar/South African Rand Exchange Rate is currently trading in the region of 9.4964 <
(Correct as of 12:30 GMT)
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