South African President Jacob Zuma elected the South African Reserve Bank Deputy Governor Lesetja Kganyago to replace Gill Marcus as head of the bank.
The appointment has been generally positively received and the South African Rand has appreciated against many of its most traded peers as a result. Meanwhile, debate over the timing of a Federal Reserve rate revision has seen the US Dollar decline against higher-yielding currencies.
The US Dollar to South African Rand exchange rate is currently trending in the region of 11.2635.
An appreciation of the South African Rand towards the end of last week was as a result of the combination of positive data and a softening US Dollar.
The KASIGO Manufacturing PMI was forecast to decline from 49.0 to 46.92, but the actual result was an increase to 50.7.
Having enjoyed a sustained bullish run over the past month or so, the US Dollar softened over the course of last week as traders feared that the huge gains weren’t necessarily justified. Speculations over the timing of a Federal Reserve benchmark rate increase dominated trader focus which saw the Dollar rise irrespective of domestic data results.
On Friday, however, the ‘Buck’ (USD) clawed back those losses after labour market data proved to be much better-than-expected. Of particular promise, for those invested in the US Dollar, was a decline in Unemployment and a positive Non-farm Payrolls score.
The US Dollar to South African Rand exchange rate has hit a low today of 11.1749.
A complete absence of economic data on Monday has seen the US Dollar soften against many of its most traded peers.
Compounding the downtrend has been increased confusion over the ‘Greenback’ (USD) valuation.
Lucy Meakin, writing for Bloomberg, stated; ‘The Dollar weakened, pushing a gauge of its strength down from a four-year high, amid debate as to how soon the Federal Reserve will raise interest rates after a report last week showed jobs gains beat economists’ forecasts , The ‘Greenback’ depreciated versus the majority of higher-yielding currencies, falling the most against the South African Rand and Mexican Peso’.
Although there hasn’t been anything in terms of South African economic data on Monday the Rand has appreciated against many of its currency competitors. This is as a result of the combination of a cooling US Dollar and positive sentiment towards the appointment of a new South African central bank Governor. Dennis Dykes, chief economist at Nedbank Group Ltd. in Johannesburg, said; ‘It’s a very good appointment […]Kganyago has been around for a long period and is qualified for the job, being very well respected in the financial markets and having credibility in the political arena as well’.
Forecast for the US Dollar to South African Rand
With economists debating the timing of a Federal Reserve rate increase and the justification of the US Dollar valuation; expect increased volatility for the ‘Buck’. Tuesday’s only potential market-moving data for the US Dollar is Consumer Credit, which is forecast to decline.
Those invested in the South African Rand will be looking towards Tuesday’s Foreign Exchange Reserves data which is expected to tic lower.
The US Dollar to South African Rand exchange rate has reached a high of 11.3707.
