The South African Rand slipped close to a one-week low against the Pound and dropped to its lowest level since last Monday against the US Dollar as it tracked the Euro lower and suffered from investor aversion to riskier assets.
The Rand came under selling pressure as the Euro made a steep decline following comments by European Central Bank policy makers at the weekend. Most expressed their concern over the strength of the Euro and talked down the single currency. As Europe is a major consumer of South African goods the Rand often tracks the Euro.
ECB president Mario Draghi added to the currency’s decline after saying that the Central Bank could introduce further stimulus measures to bolster inflation and growth in the Eurozone.
A general decline in appetite for riskier assets is also putting pressure onto the Rand. Emerging markets are being pressured by concerns over the escalating situation in Ukraine. A hundred pro-Russian gunmen attacked and stormed a police headquarters in the eastern city of Horlivka.
“Dozens of angry men hurled rocks, smashed windows and broke into a police station in the city of Horlivka not far from the border with Russia, while hundreds of onlookers cheered them on. The events in Horlivka were the latest sign of trouble in Russian-speaking eastern and southern regions, in which pro-Russian gunmen have seized a number of government buildings demanding more autonomy from the central government and closer ties with Russia,” reported the Associated Press.
The Ukrainian government promised military action to take back occupied government buildings. Such talk has heightened tensions as Russia has 40,000 troops amassed on the nation’s border.
“Not only is the US Dollar currently enjoying broad-based strength as a result of suggestions that the ECB may embark upon some quantitative easing measures, but global risk appetite also appears to have soured due to escalating geopolitical tensions between Ukraine and Russia,” Barclays Africa analysts said.
The trading week will be shortened this week due to the Easter holidays on Friday and next Monday.
South African Rand (ZAR) Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Pound Sterling,
,South African Rand,17.5880 ,
Euro,,South African Rand,14.4903 ,
US Dollar,,South African Rand,10.4790 ,
Australian Dollar,,South African Rand,9.9142,
[/table]
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