Early into trade on Thursday the Rand was holding firm against currency rivals including the Pound and US Dollar. With domestic news scarce ahead of tomorrow’s South African trade balance figures, economists expected the Rand to continue trading in the ranges recorded over the last few days.
At the current exchange rate 1 Pound will purchase 15.3538 South African Rand as of 11:15 GMT
But while one local trader stated: ‘The Rand should remain within recent ranges, but volatility is something you have to get used to, not just here, but globally’ the Rand hasn’t experienced extensive fluctuations today.
However, it has strengthened against the Pound and US Dollar as a result of foreign investors buying a greater amount of South African bonds than they sold.
The latest figures from the Johannesburg Stock Exchange show that foreign investors purchased local bonds worth a net 905 million Rand – trimming the month’s sell-off to 7.8 billion Rand.
The Pound to Rand (GBP/ZAR) Exchange Rate hit a low of 15.2391
In response to the bond buying and the Rand’s subsequent movement currency strategist John Cairns stated: ‘This is the first decent buying in two weeks. One day doesn’t make a trend, particularly with this volatile series, but yesterday’s buying does at least suggest that the aggressive selling has stopped.’
South African Reserve Bank Governor Gill Marcus yesterday commented that the central bank may not hike interest rates, despite inflationary pressures, because the nation’s economy remains weak.
It is expected that figures released by Statistics South Africa today might show that producer price inflation slowed from 5.4 per cent in April to 5.2 per cent in May.
In Absa Capital’s morning statement the financial institution remarked: ‘Yesterday’s weaker-than-expected US GDP (gross domestic product data was mildly supportive of the rand in that it suggested no speedy end to quantitative easing (QE). We are not expecting much reaction to this morning’s local producer inflation print, but the rand could react more substantively to Friday’s merchandise trade data. Any more developments on the Fed QE tapering front also remains key, but there is not much in the way of data until next week’s all-important US employment report. Hence, a range of 10.00 to 10.20 per dollar seems likely to persist for the remainder of the week’.
Tomorrow’s South African balance of trade figures, due out at 13:00 GMT, are expected to show a deficit of 12.0 billion Rand for May following April’s 15.02 billion rand estimate.
Although the Rand posted a modest gain against the Pound and US Dollar the commodity-driven currency lost ground against the Euro and Australian/New Zealand Dollars.
Today’s US news, including a speech given by Federal Reserve officials, initial jobless claims figures and personal spending data, could inspire additional Rand movement.
Current South African (ZAR) Exchange Rates
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The US Dollar/South African Rand Exchange Rate is currently in the region of: 10.0435 <
The Pound Sterling/South African Rand Exchange Rate is currently in the region of: 15.3538 <
The Euro/South African Rand Exchange Rate is currently in the region of: 13.1039 >
The Australian Dollar/South African Rand Exchange Rate is currently in the region of: 9.3919 >
The New Zealand Dollar/South African Rand Exchange Rate is currently in the region of 7.8350 >
The Canadian Dollar/South African Rand Exchange Rate is currently trading in the region of 9.6633 >
(Correct as of 11:15 GMT)
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