After mining sector concerns and less-than-impressive domestic growth data pushed the Rand to new lows on Wednesday, the currency was able to recover some ground during local trade – despite a drop in Tokyo’s Nikkei Index.
At the current exchange rate 1 US Dollar will purchase 9.7978 South African Rand as of 10:30 am GMT
The commodity-driven currency edged towards 10 Rand per Dollar after Tuesday’s domestic GDP figures failed to meet expectations and foreign investors continued to sell off local bonds.
As one currency expert noted, the growth data was ‘a shocker and turned the market significantly because [it] will have a big effect on our trade balance.’
South Africa’s trade balance figures for April are due for publication tomorrow. Last month the nation recorded a deficit of 7.7 billion Rand.
Despite the domestic concerns pressuring the Rand, the currency was slightly stronger against the US Dollar as the European session began – but further weakness is expected.
According to Absa Capital: ‘Although the Rand is slightly firmer this morning, the fact that there is more domestic strike activity in the offing today (this time the police department) is likely to ensure that the local unit struggles to mount a sustained recovery. This strike activity is likely to dent sentiment even further at a time when foreigners are aggressively offloading some of their South African bond holdings. Yesterday nonresidents sold a massive R4.9bn of South African bonds, which is especially concerning given South Africa’s large current account deficit financing needs. Hence, we still favour selling into rand strength and if this afternoon’s US GDP data proves better than expected then the rand could weaken further on a likely fresh wave of broad-based US dollar strength’.
US first quarter GDP figures are due to be released at 13:30 GMT. US initial jobless claims, personal consumption and pending home sales figures will also be of interest.
Current South African (ZAR) Exchange Rates:
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The South African Rand/US Dollar Exchange Rate is currently in the region of: 0.1019 <
The South African Rand/Euro Exchange Rate is currently in the region of: 0.0787 <
The South African Rand/Pound Sterling Exchange Rate is currently in the region of: 0.0672 <
The South African Rand/Australian Dollar Exchange Rate is currently in the region of: 0.1063 <
The US Dollar/South African Rand Exchange Rate is currently in the region of: 9.7978 >
The Pound Sterling/South African Rand Exchange Rate is currently in the region of: 14.8687 >
The Euro/South African Rand Exchange Rate is currently in the region of: 12.7168 >
The Australian Dollar/South African Rand Exchange Rate is currently in the region of: 9.4251 >
(Correct as of 10:30 am GMT)
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