Although the Rand was able to gain yesterday as a report showed that South Africa’s trade deficit had unexpectedly declined, slumping bonds pushed benchmark yields beyond a 12-month high and triggered Rand losses.
At the current exchange rate 1 US Dollar will purchase 10.2335 South African Rand as of 14:00 GMT
Fed Chairman Ben Bernanke’s speech regarding the likelihood of the Federal Reserve tapering its extensive stimulus measures in the months ahead had an instant and dramatic effect on the market.
Commodity-driven currencies like the Rand were also adversely affected by some less than impressive manufacturing data from China.
HSBC’s manufacturing PMI for China came in at 48.3 in June, down from 49.2 in May and significantly lower than the 49.1 predicted. The result shows that the sector is contracting at a faster pace than forecast.
The Rand to US Dollar (USD/ZAR) Exchange Rate fell to 10.2547 against the US Dollar
As analyst Walter de Wet noted: ‘Overnight developments from the US and China have knocked South African markets. What remains of the week could be volatile.’
An improved inflation outlook from the Federal Reserve also lessened the appeal of gold as a safe-haven asset, and consequently weakened the Rand. The Fed now forecasts that inflation will fall to between 0.8 per cent and 1.2 per cent in 2013 and the spot gold price has dipped 3.01 percent.
One industry expert said of the news: ‘The Fed thought the economic support that they were providing to the economy would fuel inflation but that has not materialised, causing the downward revision.’
Yesterday the Federal Open Market Committee reasserted its commitment to reducing its current level of stimulus in line with US economic growth. The US central bank has forecast that quantitative easing could be brought to a complete end by mid 2014.
Current South African (ZAR) Exchange Rates
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The US Dollar/South African Rand Exchange Rate is currently in the region of: 10.2335 >
The Pound Sterling/South African Rand Exchange Rate is currently in the region of: 15.8182 >
The Euro/South African Rand Exchange Rate is currently in the region of: 13.5056 >
The Australian Dollar/South African Rand Exchange Rate is currently in the region of: 9.4426 >
The New Zealand Dollar/South African Rand Exchange Rate is currently in the region of 7.9557 >
The Canadian Dollar/South African Rand Exchange Rate is currently trading in the region of 9.9101 >
(Correct as of 14:00 GMT)
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