The South African Rand is set to make its biggest decline in six weeks as speculation over a reduction to the US Federal Reserve’s quantitative easing programme looks set to increase.
In Friday trading the currency was trading relatively flat as concerns over labour unrest were raised on the one-year anniversary of the Marikana mine massacre which saw police shoot dead 34 striking miners. The day marked the deadliest security incident since the end of the apartheid in 1994.
Tension remains high in the mining sector following the murder of a mine worker earlier in the week and continuing clashes between rival trade unions. Economists have said that the labour unrest in the economically crucial manufacturing and mining sectors pose long-term risk for the South African economy.
Unrest looks likely to escalate as auto sector workers revealed that they plan to strike next Monday. Such action will prove to be a big blow to the economy as the auto sector continues to be an industry that has seen continued consumer demand.
Combining with investor risk aversion is the negative impact of the expectations of a reduction in the US Federal Reserve quantitative easing programme. A reduction will see the US Dollar strengthen and the Rand weaken as inflows of Dollars into the African economy lessens.
“US data and the impact of the Dollar continue to offer the main risk to the Rand. US Treasury yields have spiked, US equities have fallen sharply, and gold has surged. This is quite bad for the Rand,” said John Cairns a currency strategist at Rand Merchant Bank.
Current South African (ZAR) Exchange Rates:
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The US Dollar/South African Rand Exchange Rate is currently in the region of: 9.9721 >
The Pound Sterling/South African Rand Exchange Rate is currently in the region of: 15.5887 >
The Euro/South African Rand Exchange Rate is currently in the region of: 13.3048 >
The Australian Dollar/South African Rand Exchange Rate is currently in the region of: 9.1549 >
The New Zealand Dollar/South African Rand Exchange Rate is currently in the region of 8.0674 >
The Canadian Dollar/South African Rand Exchange Rate is currently trading in the region of 9.6783 >
(Correct as of 12:05 pm GMT)
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