During the European session the Rand extended gains against the Pound, but fell from a four-month high against the US Dollar as investors deemed the currency’s earlier rally overdone.
The Pound Sterling/Rand exchange rate is currently in the region of 15.4826 as of 14:50 GMT
Emerging market assets like the Rand enjoyed a significant boost overnight as the Fed refrained from tapering stimulus, despite the majority of economists forecasting at least a 5 billion Dollar reduction.
After the surprising news broke one South African trader commented; ‘It just goes to show that central bankers do not like to be labelled boring, so every now and again they upset the apple cart, just to make sure that markets do not run ahead of themselves’.
The Rand jumped to 9.5484 against its North American rival – the currency’s strongest level since May.
However, during the local session concerns that the market had reacted too violently to Fed Chairman Ben Bernanke’s assertion that there is ‘no fixed calendar schedule’ for tapering easing, saw the Rand pair its gain.
The GBP/ZAR exchange rate hit a low of 15.2718 Rand per Pound
Prior to the release of US initial jobless claims data and the South African Reserve Bank rate decision, the Rand softened by 0.4 per cent against the ‘Greenback’.
The reversal prompted this response from Johannesburg-based strategist John Cairns; ‘Fed tapering has been delayed and not cancelled. While the Fed’s decision is great for emerging markets in the short term, there is also an unfortunate consequence. The uncertainty remains, and so too will volatility.’
The currency was relatively unchanged against its peers in the wake of the South African Reserve Bank rate decision.
The central bank opted to hold rates at 5 per cent, as expected, in order to continue providing the domestic economy with some much needed support.
As one economist forecast, with the nation struggling, ‘the Reserve Bank is unlikely to consider hiking rates [but will] probably look to keep interest rates on hold for an extended period.’
However, the Rand did modestly extend its decline against its North American counterpart as data showed less US initial jobless claims than expected.
With the strength of the US employment sector having a significant impact on the Federal Reserve’s decision making, any positive signs are likely to raise tapering speculation again.
Current South African (ZAR) Exchange Rates:
< Down > Up
The US Dollar/South African Rand Exchange Rate is currently in the region of: 9.6250 >
The Pound Sterling/South African Rand Exchange Rate is currently in the region of: 15.4897 >
The Euro/South African Rand Exchange Rate is currently in the region of: 13.0569 >
The Australian Dollar/South African Rand Exchange Rate is currently in the region of: 9.1796 >
The New Zealand Dollar/South African Rand Exchange Rate is currently in the region of 8.0736 >
The Canadian Dollar/South African Rand Exchange Rate is currently trading in the region of 9.4325 >
(Correct as of 14:50 GMT)
Comments are closed.