The South African Rand has weakened against the US Dollar, Sterling and the Euro after the South African Reserve Bank revealed that the nation’s payments balance for the second quarter of 2013 posted a deficit of R15.15 billion.
“We were expecting a deficit; it was just the size of the deficit that we did not know. In addition we have month-end pressures as importers pay their bills,” said a local foreign exchange trader.
The Central Bank showed that growth in credit extension to the private sector slowed in June. Monday’s data will support the case for the Bank to consider an interest rate cut. Rates have remained unchanged since 2012 so a cut could be implemented to boost consumer demand and spur economic growth.
RMB said in its morning report that there was large two-way risk to the Rand in a data and event-filled week, so high volatility was expected despite it being holiday season in the northern hemisphere.
“This week sees policy decisions from the US Federal Reserve Bank, Bank of England and European Central Bank. No major policy changes are expected but the markets are still looking for direction on future policy from all three. The most important of the lot is obviously the Fed, where guidance on when and how aggressive ‘tapering’ is expected,” the bank said.
On Wednesday, South Africa is expected to post a 15th consecutive monthly trade deficit which could bring the cumulative shortfall this year to 78.4 billion Rand, compared with 51 billion Rand in the previous year. A widening trade deficit puts pressure upon the country’s current account, which will undermine the currency.
Current South African (ZAR) Exchange Rates
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The US Dollar/South African Rand Exchange Rate is currently in the region of: 9.8025 >
The Pound Sterling/South African Rand Exchange Rate is currently in the region of: 15.0828 >
The Euro/South African Rand Exchange Rate is currently in the region of: 13.0285 >
The Australian Dollar/South African Rand Exchange Rate is currently in the region of: 9.0588 >
The New Zealand Dollar/South African Rand Exchange Rate is currently in the region of 7.9157 >
The Canadian Dollar/South African Rand Exchange Rate is currently trading in the region of 9.5383 >
(Correct as of 11:40 am GMT)
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