After rallying against its US rival over the weekend the Rand began the local session holding steady against the ‘Greenback’. However, as trade progressed the South African asset went on to strengthen to an eight-week high.
The Rand also advanced on a largely static Pound.
The Pound Sterling/Rand exchange rate is currently in the region of 15.5803 as of 12:10 GMT
After enjoying an initial boost in response to a positive adjustment to Rightmove’s house price growth forecast, the British currency’s movement was restricted by a lack of UK news and the Rand went on to post a modest gain against the Pound.
The Rand’s bullish relationship with the US Dollar was inspired by the news that US quantitative easing could continue for longer than anticipated after current Federal Reserve Chairman Ben Bernanke hands over leadership of the central bank in January.
Although Former Treasury Secretary Lawrence Summers was expected to take on the position, he has removed himself from the running – making it increasingly likely that the more dovish Janet Yellen will take charge. As Yellen is in favour of accommodative easing policy the US Dollar broadly tumbled after news of this development broke.
As one South African based trader observed; ‘The withdrawal was a surprise as he and his backers had invested so much time in his candidacy. As he was seen as fairly hawkish, the Dollar has weakened, which is great news for emerging market currencies.’
The GBP/ZAR exchange rate hit a low of 15.4266 Rand per Pound
Similarly, in its morning report Absa Capital stated; ‘Broad-based Dollar weakness overnight has ensured that the Rand has begun the week on the front foot ahead of Wednesday’s much-anticipated Federal Open Market Committee meeting. Summers’ withdrawal has hindered the Greenback because he was regarded as an interest rate hawk.’
However, whilst this news had an immediate positive impact on emerging market currencies, the Rand could well pare gains by the middle of the week if the Fed reduces its bond purchases by the 15 billion Dollar’s expected.
Last week the Rand lost ground against Sterling as the British currency climbed in response to several pieces of stronger than anticipated domestic data. If tomorrow’s UK inflation figures contribute to the nation’s more encouraging economic outlook the Rand could slip against the Pound.
The week’s main South African economic news to be aware of includes Wednesday’s inflation and retail sales figures and Thursday’s Reserve Bank of South Africa rate decision.
Current South African (ZAR) Exchange Rates:
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The US Dollar/South African Rand Exchange Rate is currently in the region of: 9.7711 <
The Pound Sterling/South African Rand Exchange Rate is currently in the region of: 15.5803 <
The Euro/South African Rand Exchange Rate is currently in the region of: 13.0404 <
The Australian Dollar/South African Rand Exchange Rate is currently in the region of: 9.1502 <
The New Zealand Dollar/South African Rand Exchange Rate is currently in the region of 8.0908 >
The Canadian Dollar/South African Rand Exchange Rate is currently trading in the region of 9.4932 <
(Correct as of 12:10 GMT)
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