Sterling closed the week softer against the Rand as several factors helped buoy the South African asset.
The Rand was able to achieve two-month highs against the US Dollar yesterday as the Euro (which it tracks) rallied in response to the European Central Bank’s decision to leave stimulus unaltered.
As the Eurozone is South Africa’s main trading partner, the news that the ECB believes the currency bloc’s recovery to be assured enough to negate the need for further stimulus boosted South Africa’s trade prospects.
The Eurozone positivity continued today as industrial production in Germany was shown to have increased by 0.8 per cent month-on-month following a positively revised increase of 0.1 per cent in December.
Rand gains were also enabled by the ongoing efforts to bring about a diplomatic resolution to Ukraine’s recent crisis.
Although South Africa was affected by its first rolling blackouts for six years, the Rand experienced only minimal movement.
State utility provider Eskom employed rolling blackouts for the first time since 2008 as the power supply was limited as a result of the recent wet weather compromising coal stores.
During local trading the Rand was trading higher against a fairly static Pound and advanced on the US Dollar.
An industry official from Rand Merchant Bank asserted; ‘The mood is a little more cautious this morning as the market awaits this afternoon’s US non-farm payroll number. Dollar/Rand is now around 10.60, needing to break 10.57 to keep the momentum going.’
Investors are betting that the US employment report will show that the world’s largest economy added 150,000 positions in February following a jobs gain of 113,000 in January.
The unemployment rate is expected to have held at 6.6 per cent.
A surprising result could inspire US Dollar movement and the Rand could push higher before the weekend.
GBP/ZAR fluctuations are likely to be limited and the Pound to South African Dollar exchange rate may hold declines into next week.
Upcoming South African reports to look out for include the nation’s business confidence figures, current account data, mining and manufacturing production numbers.
UK reports, and the nation’s trade balance figures in particular, will also be of interest.
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,17.6735,
Euro,,South African Rand,14.6584,
US Dollar,,South African Rand,10.5580,
Australian Dollar,,South African Rand,9.6495,
New Zealand Dollar,,South African Rand,8.9701,
Canadian Dollar,,South African Rand,9.6152,
[/table]
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