After a week dominated by risk-aversion and Rand weakness, South Africa’s currency began the local session slightly stronger against peers like the US Dollar and Euro as yesterday’s positive Eurozone developments and ‘Greenback’ declines helped the asset advance.
The Pound Sterling/Rand exchange rate is currently in the region of 16.3089 as of 11:50 GMT
However, the Rand remained softer against the Pound as the UK services sector showed strong expansion in September, indicating that third quarter growth will be the best quarterly result recorded since before the financial crisis in 2007.
South Africa’s less-than-impressive manufacturing data (released earlier this week) also continued to restrain the Rand against its British rival.
While the Rand continues to trade beyond the psychological 10 Rand per Dollar level, it has recovered some of the week’s losses as the ongoing partial federal shutdown and the dimming likelihood of the Federal Reserve tapering stimulus weakened the US Dollar.
With investors fearing the impact the shutdown will have on US economic growth, the ‘Greenback’ will remain under pressure until the budget issues are resolved and the looming fiscal cliff has been safely navigated.
The GBP/ZAR exchange rate hit a high of 16.3561 Rand per Pound
According to one local trader; ‘The Rand weakened to 10.15 Rand per Dollar this morning, but has firmed due to a stronger Euro and weaker Dollar. The European Central Bank left its key rate unchanged [and the] Euro strengthened against the Dollar after ECB President Mario Draghi said the Bank will monitor the situation in Eurozone markets and will maintain liquidity if it is needed.’
Compared with some emerging-market assets, the Rand’s advance on the US Dollar has been minimal as domestic economic weakness takes a toll.
While tomorrow’s US non-farm payrolls report should inspire significant market volatility, if the shutdown continues the data won’t be released – further reducing the odds of the Federal Reserve tapering stimulus.
Next week the main piece of South African data to look out for is the nation’s foreign exchange reserves figures.
Current South African (ZAR) Exchange Rates:
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The US Dollar/South African Rand Exchange Rate is currently in the region of: 10.0445 >
The Pound Sterling/South African Rand Exchange Rate is currently in the region of: 16.3089 >
The Euro/South African Rand Exchange Rate is currently in the region of: 13.6785 >
The Australian Dollar/South African Rand Exchange Rate is currently in the region of: 9.3856 >
The New Zealand Dollar/South African Rand Exchange Rate is currently in the region of 8.3105 <
The Canadian Dollar/South African Rand Exchange Rate is currently trading in the region of 9.7723 <
(Correct as of 11:50 GMT)
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