The Rand was trading softer in early trade on Friday with traders expecting a range-bound day until the release the release of the USA’s first quarter GDP data.
According to Absa Capital the Rand has enjoyed gains due to the improvement in commodity prices and as more foreigners purchased South African equities.
“Rand bulls might have also been encouraged by suggestions from the finance minister that the currency was undervalued. These comments were consistent with similar remarks made by Bank governor Gill Marcus last month,” Absa Capital said.
“While we concur that the Rand is undervalued on a number of metrics, such as purchasing power parity (on which basis the bank says it is 9% undervalued), we believe South Africa’s poor fundamentals backdrop (twin deficits and pedestrian GDP growth) and lingering labour concerns could ensure that the local unit remains undervalued for a protracted period of time.” It added.
Although there is not much in the way of local data due for release today, the market will be eager to see the outcome of this afternoon’s US GDP number.
A worse-than-expected outcome could be Rand-supportive if the market interprets such an outcome as meaning the Fed will persist with its quantitative easing measures for a while longer.
Current South African Rand (ZAR) Exchange Rates
The South African Rand to Euro exchange rate is currently trading at 0.0837
The South African Rand to US Dollar exchange rate is currently trading at 0.1092
The South African Rand to Pound Sterling exchange rate is currently trading at 0.0707
The US Dollar to South African Rand exchange rate is currently trading at 9.1536
The Pound Sterling to South African Rand exchange rate is currently trading at 14.1303
These exchange rates were correct as of 10:30 am GMT
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