The Pound is higher against the South African Rand despite the release of better-than-forecast current account data for Africa’s biggest economy.
Tensions between the West and Russia are weighing heavily upon the Rand and other emerging market currencies and wiped out any potential gains the positive data would have normally granted. The situation in Ukraine deteriorated on Wednesday after Russia refused negotiations with the Ukrainian government and as the European Union set a deadline for Russian forces to withdraw from the Crimea or face economic sanctions.
“Further negative headlines on Crimea over the coming days could place the Rand under renewed selling pressure,” said Barclays Africa.
Further declines were limited however due to the release of a positive current account report.
According to the South African Reserve Bank the nation posted its smallest current account deficit in almost two years in the final quarter of 2013 as increased global demand and weaker Rand boosted exports.
The deficit narrowed to 5.1% of GDP, down from the 6.4% figure seen in the third quarter. The overall shortfall equated to R179 billion Economists had been forecasting that the deficit would narrow to 5.5% of GDP. Exports rebounded in the fourth quarter after the end of labour strikes at carmakers and mines that disrupted production, helping to boost the trade account into surplus in the final two months of last year.
“Several emerging market economies with large current account deficits recently experienced significant currency depreciations and heightened inflation. Domestically, lingering labour market tensions, weak economic growth and the current account and fiscal deficits may have added to the shift in sentiment regarding emerging markets,” said the Reserve Bank.
South African Rand (ZAR) Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Pound Sterling,
,South African Rand,18.0196 ,
Euro,,South African Rand,15.1354 ,
US Dollar,,South African Rand,10.9177 ,
Australian Dollar,,South African Rand,9.7534 ,
[/table]
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