Yesterday the Rand softened against the Pound but advanced on the US Dollar as South Africa’s manufacturing sector was shown to have improved unexpectedly in August, with a key survey hitting a six-year high. The surprising result was largely due to local factories taking advantage of a weaker Rand.
At the current exchange rate 1 Pound will purchase 16.0130 South African Rand as of 12:25 GMT
When the Kagiso purchasing managers’ index was released, revealing a jump of 4.3 points, an industry expert with Standard Chartered commented: ‘While the threat of industrial unrest remains, there is finally some sign of recovery in the rest of the world, and the promise implied by a weaker ZAR is helping. It also suggests that the outlook for trade in the second half may not be as dismal as in the first.’
The positive domestic news, coupled with a static US Dollar (as a result of North American markets being closed for Labour Day) helped the Rand strengthen modestly against the ‘Greenback’. However, better-than-forecast UK news ensured that the Rand weakened against its British counterpart.
The GBP/ZAR exchange rate hit a high of 16.0719 Rand per Pound
As local trade began today the Rand was little changed ahead of the publication of South African business confidence data, although the commodity-driven currency went on to lose additional ground against the Pound as the UK construction sector expanded by significantly more than expected.
Declines were compounded after business confidence in South Africa dipped as a range of socio-economic concerns took a toll.
While a business confidence index compiled by the South African Chamber of Commerce and Industry slipped from 90.7 to 90.5 in August (close to a ten-year low) the RMB/BER business confidence gauge slumped from 48 in the second quarter to 42 in the third – implying that the majority of respondents aren’t satisfied with business conditions.
The Chamber of Commerce stated that ‘The continuing lack of economic momentum, on-going labour disruptions of the economy and the slowdown in growth in the Brics countries are important factors affecting business confidence. It is important that supportive conditions for economic growth and disruptions by militant labour conduct are addressed urgently.’
Meanwhile the RMB asserted: ‘Sluggish, and volatile, economic growth is probably the best we can hope for in the period ahead. Deteriorating confidence coupled with widespread strike action point to growth in all likelihood having fallen back to levels of around 2.5 per cent in the second half of the year.’
The Rand fell against the US Dollar after the report was published and could well extend declines as the North American session gets underway. If the US ISM manufacturing gauge trumps expectations, lending support to the case for the Federal Reserve reining in quantitative easing, the ‘Greenback’ may turn bullish against emerging-market assets.
This week’s US employment data will also play a major part in dictating Rand movement in the days ahead.
Current South African (ZAR) Exchange Rates:
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The US Dollar/South African Rand Exchange Rate is currently in the region of: 10.2973 >
The Pound Sterling/South African Rand Exchange Rate is currently in the region of: 16.0130 >
The Euro/South African Rand Exchange Rate is currently in the region of: 13.5292 >
The Australian Dollar/South African Rand Exchange Rate is currently in the region of: 9.2633 >
The New Zealand Dollar/South African Rand Exchange Rate is currently in the region of 8.0101 >
The Canadian Dollar/South African Rand Exchange Rate is currently trading in the region of 9.6690 <
(Correct as of 12:25 GMT)
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