The South African Rand is holding steady against the Pound and has strengthened to a two-week high against the US Dollar as emerging markets see support from speculation that the US Federal Reserve will maintain its monetary easing programme.
As the European markets opened the Rand was trading at Monday’s closing levels, rising to a two-week high of R9.8540. There is some strength in the currency today and it is expected to remain firm for the rest of the week, remaining below the psychologically important R10 level against the ‘Greenback’.
The currency has been boosted in recent days by yesterday’s weaker-than-expected US retail sales data, which has increased speculation that the Federal Reserve will refrain from withdrawing its monetary stimulus programme. The speculation has also buoyed other emerging market currencies.
The Federal Reserve programme has seen billions of Dollars flow into higher-yielding emerging markets, expectations of a reduction in recent months has seen investors withdraw their cash over the expectations of a withdrawal. Such actions have seen currencies such as the Indian Rupee and the Rand tumble.
“The Dollar remains defensive and the Euro has continued to climb this morning, which is the catalyst for the Rand gains. Foreigners were net buyers of government bonds on Monday, which has also helped support the currency,” said Christopher Shiells from Informa Global Markets.
The Rand remains vulnerable however as investors cast their gaze to the upcoming wage negotiations taking place in South Africa’s troubled mining sector. The acrimonious start has created concern in a sector that has been riddled with worker violence and strikes. So far South African gold mining companies have offered a 4% pay rise, far below the demands made by the unions.
“The future of the industry is at stake,” said Elize Strydom, who is running the wage negotiations on behalf of gold companies at industry body Chamber of Mines. Ms. Strydom said if the unions push for wage increases above inflation “it would be dire” for the industry.
Current South African (ZAR) Exchange Rates
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The US Dollar/South African Rand Exchange Rate is currently in the region of: 9.9263 >
The Pound Sterling/South African Rand Exchange Rate is currently in the region of: 14.9807 >
The Euro/South African Rand Exchange Rate is currently in the region of: 12.9717 >
The Australian Dollar/South African Rand Exchange Rate is currently in the region of: 9.1042 >
The New Zealand Dollar/South African Rand Exchange Rate is currently in the region of 7.7698 >
The Canadian Dollar/South African Rand Exchange Rate is currently trading in the region of 9.5100 <
(Correct as of 09:40 am GMT)
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