While the South African Rand was able to climb against its British rival during the local session, its range-bound relationship with the US Dollar continued as tensions surrounding a possible US default mounted.
The Pound Sterling/Rand exchange rate is currently in the region of 16.0066 as of 11:15 GMT
Sterling softened against peers like the Rand and US Dollar as a cautious trading environment and speculation that the Pound rally was excessive weighted on the asset.
The Rand was also moderately boosted against the Pound as China’s services sector expanded in September. Although the HSBC gauge dipped from 52.8 to 52.4 it remained well above the 50 mark separating growth from contraction and supported South Africa’s trade prospects with the world’s second largest economy.
The GBP/ZAR exchange rate hit a low of 15.9271 Rand per Pound
Against its US counterpart the Rand was slightly firmer, but the commodity-driven currency continued to trade in a narrow range as the federal shutdown went on for an eighth day and US President Barack Obama heightened default fears.
Obama’s statement, that he won’t negotiate with Republican lawmakers over the debt ceiling, added to concerns that the US could be heading towards a potentially cataclysmic economic meltdown, one with extensive repercussions for emerging market and commodity-driven economies like South Africa.
While investors and top ratings agency Moody’s see only a low risk of the US defaulting, the October 17th deadline is fast approaching and every day which passes without resolution being achieved adds to the pressure on US growth prospects.
With pertinent economic news for South Africa not scheduled for release until Thursday, US developments are likely to continue dictating Rand movement.
According to analysts with Barclay’s the Rand could stay trading in a tight range until the current US confusion is clarified.
However, HSBC Holdings also reported recently that after nearly three-years of deprecation, the Rand’s fortunes could be about to change. Currency strategist David Bloom commented; ‘The adjustment already seen in the currency will be sufficient to foster an improvement in the terms of trade, and ease the pressure on the exchange rate. If the data on the net trade can improve, then the balance of payments situation can stabilise without recourse to higher interest rates or a further lurch lower in the currency.’
Tomorrow movement in the GBP/ZAR pairing may occur in response to UK manufacturing/industrial production data, although investors will also be looking ahead to Thursday’s manufacturing/mining production figures for South Africa.
Current South African (ZAR) Exchange Rates:
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The US Dollar/South African Rand Exchange Rate is currently in the region of: 9.9729 >
The Pound Sterling/South African Rand Exchange Rate is currently in the region of: 16.0066 <
The Euro/South African Rand Exchange Rate is currently in the region of: 13.5368 >
The Australian Dollar/South African Rand Exchange Rate is currently in the region of: 9.4608 >
The New Zealand Dollar/South African Rand Exchange Rate is currently in the region of 8.3121 <
The Canadian Dollar/South African Rand Exchange Rate is currently trading in the region of 9.7114 >
(Correct as of 11:15 GMT)
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