Pound to Rand (GBP/ZAR) Exchange Rate Softer Despite Spike in Risk Aversion

As another week of trading nears an end the comparatively static Pound remains trading in a narrow range against the Rand.

With UK data thin on the ground today Pound movement is likely to be limited, and while the emerging-market Rand edged away from recent highs against the US Dollar, it was holding its own against Sterling during local trading.

Earlier this week the Rand was riding high as interest in higher-risk assets was supported by the dovish Federal Open Market Committee meeting minutes.

The currency hit its highest level for 2014 before giving up some of its gains yesterday following the release of disappointing domestic mining and manufacturing output figures, but was still broadly stronger.

However, with Asian stocks declining, a sell-off in biotech markets occurring and Chinese inflation figures adding to concerns of a slowdown in the world’s largest economy, risk appetite waned and the Rand lost ground against the US Dollar.

According to an analyst with Standard Bank; ‘Not a particularly great day for risky assets yesterday as we saw the major equity markets around the world pull back and for the most part close down for the day.’

Similarly, industry expert John Cairns was quoted as saying; ‘The overnight near-panic selloff in biotech stocks has hit risk appetite hard and is leading to a sharply weaker Rand.’

But the Pound was also struggling as the Bank of England’s decision to refrain from altering stimulus kept pressure on the asset and the Pound to Rand (GBP/ZAR) pairing was weaker as trading progressed.

Next week the major South African report to focus on is the nation’s retail sales figures, due out on Friday.

In January sales increased by 0.8 per cent month-on-month and 6.8 per cent year-on-year.

Investors will be hoping for another increase in sales in February.

As South African data is fairly light, Rand movement will largely be dictated by global economic developments next week.

While US and Eurozone news will be of interest, the direction taken by the GBP/ZAR pairing may be driven by UK inflation figures and British employment data.

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,17.5255,
Euro,,South African Rand,14.5019,
US Dollar,,South African Rand,10.4472,
Australian Dollar,,South African Rand,9.7679,
New Zealand Dollar,,South African Rand,9.0654,
Canadian Dollar,,South African Rand,9.5426,
[/table]