While the Rand was able to surge against its US counterpart yesterday and gained on several of its other main currency rivals following the release of South African inflation figures, signs that the Federal Reserve may begin tapering stimulus in the next few months helped the ‘Greenback’ recover losses.
The Pound Sterling/Rand exchange rate is currently in the region of 16.3104 as of 14:50 GMT
The USD/ZAR pairing was also supported by stronger-than-estimated retail sales figures for the US.
Disappointing manufacturing data for China added to the commodity-driven Rand’s woes overnight and the currency began local trade softer.
Meanwhile, during the European session the Pound rallied against the Rand as the UK budget deficit narrowed and an index of UK factory orders hit an 18-year high.
The GBP/ZAR exchange rate hit a low of 16.1584 Rand per Pound
The currency was little changed following the Reserve Bank of South Africa’s rate decision.
Before Gill Marcus, Governor of the Monetary Policy Committee, made his announcement economist Adenaan Hardien noted; ‘The bank still sits with the same kind of pressures they had last time, which is on the one hand a fairly weak economy, which should argue for easing, yet there are inflation risks.’
The South African central bank opted to leave its repo rate at 5 per cent, as economists expected.
Given yesterday’s decline in inflation, which was more significant than economists had expected, the central bank is now expected to leave rates flat for longer than previously estimated.
Some industry experts have expressed the view that policymakers are unlikely to introduce quantitative easing measures in order to shore up the economy, despite the fact that national growth is expected to be 0.4 per cent less this year than in 2012 because of domestic strikes and European concerns.
Johannesburg-based economist Elize Kruger stressed; ‘If a 50 basis point rate cut could have done it, the bank would probably have tried it already. The government can do certain things, like implementing capital projects which are already planned and by spending capital budgets.’
With both UK and South African news lacking tomorrow investors will start looking ahead to next week SA growth 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: 10.1390 >
The Pound Sterling/South African Rand Exchange Rate is currently in the region of: 16.3104 >
The Euro/South African Rand Exchange Rate is currently in the region of: 13.6451 >
The Australian Dollar/South African Rand Exchange Rate is currently in the region of: 9.5757 >
The New Zealand Dollar/South African Rand Exchange Rate is currently in the region of 8.3457 <
The Canadian Dollar/South African Rand Exchange Rate is currently trading in the region of 9.6518 <
(Correct as of 14:50 GMT)
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