The South African Rand slumped below a three-week low against the US Dollar due to poor Gross domestic product (GDP) data from the Eurozone and rising concerns over labour unrest in the nations mining sector.
Disappointing GDP data out of Europe’s top two economies, France and Germany, caused the Euro to tumble against the US Dollar and other major currencies having a knock on effect on the Rand. As the Eurozone is South Africa’s biggest trading partner, the Rand is often affected by the single currency’s movements.
“We are weaker on the softer euro as the data this morning confirms that the Eurozone is struggling to get out of recession,” a local foreign exchange trader said.
Adding to the Rand’s decline is the increase in fear among investors that the nation could see a repeat of last year’s violent miner’s strikes that left over 30 people dead and inflicted huge damage on the South African economy. Workers at Lonmin’s Rustenburg and Marikana mines were on strike for the second day on Wednesday, halting production at all 13 shafts of the world’s third-biggest platinum producer. With tensions running high over looming wage negotiations and job cuts the situation is similar to a powder keg.
“This has reminded investors that the currency remains vulnerable to portfolio flows,” said Christopher Shiells, emerging market analyst at Informa Global Markets.
“We see Dollar/Rand perhaps testing the late April high above R9.3000.”
The Rand is expected to weaken further throughout Wednesday following the release of the latest South African retail sales for March. Economists are expecting the data to show that growth in sales has fallen to 2.4% on a year-by-year basis, down from the five-month high recorded in February. Analysts expect household consumption to moderate since South Africa’s economic outlook remains poor and prospects for job creation remain bleak.
Current South African Rand (ZAR) Exchange Rates
The South African Rand/US Dollar Exchange Rate is currently in the region of: 0.1081
The South African Rand/Euro Exchange Rate is currently in the region of: 0.0837
The South African Rand/Pound Sterling Exchange Rate is currently in the region of: 0.0709
The South African Rand/Australian Dollar Exchange Rate is currently in the region of: 0.1094
The US Dollar/South African Rand Exchange Rate is currently in the region of: 9.2478
The Pound Sterling/South African Rand Exchange Rate is currently in the region of: 14.0883
The Euro/South African Rand Exchange Rate is currently in the region of: 11.9370
The Australian Dollar/South African Rand Exchange Rate is currently in the region of: 9.1339
(Correct as of 11:25 am GMT)
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