The South African Rand is expected to come under further pressure for most of this week as economists continue to be wary of the African nation’s economic strength.
Tuesday sees the release of the latest current account data, which if it comes in worse-than-expected could set a negative tone o the rest of the week. Investor confidence has been damaged so far this year after the trade deficit figures for February increased to a record high of R24.53 billion compared from R2.7 billion in December. As a result of the deficit the Rand breached the psychologically key level of R9.0 against the US Dollar.
As well as the latest current account data the markets will be keeping a close eye on the newest current account data, manufacturing production and retail sales.
“A continuation in the widening of the current account deficit and the ratings agencies may start to become more vocal especially as the country is already on a ‘negative’ watch with all of them,” Standard Bank trader Warrick Butler wrote in a note. “With the level of foreign investment into our bond market, this will not be the kind of noise they will want to hear.”
The weakening of the currency over the past year has caused Reserve Bank Governor Gill Marcus to warn that the currency may have weakened too much, requiring policymakers to keep a close eye on wages and prices. The wage issue in particular is a cause for concern as most of the labour unrest and violence seen in the agriculture and mining sectors has been partly caused by worker demands for higher wages.
Ms Marcus also warned that inflation in the country could breach the 3%-5% level.
Current ZAR Exchange Rates
The South African Rand to Euro exchange rate is currently trading at 0.0840
The South African Rand to US Dollar exchange rate is currently trading at 0.1093
The South African Rand to Pound Sterling exchange rate is currently trading at 0.0732
The South African Rand to Australian Dollar exchange rate is currently trading at 0.10689
The South African Rand to New Zealand Dollar exchange rate is currently trading at 0.1333
The South African Rand to Canadian Dollar exchange rate is currently trading at 0.1124
These exchange rates were correct as of 09:40 am GMT
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