The South African tender has lost almost 4.2% of its value against Sterling in the intervening period, as fears grew over the effects which escalating levels of civil unrest will have on South Africa’s economy.
Foreign Currency Market Update – GBP / ZAR Update
Today has marked a landmark session for the Pound to South African Rand exchange rate – the pair has spiralled to its highest level for several years, touching 13.5531 earlier. The South African tender had seen strong support at the end of last week’s session which carried on into Monday, thanks to improved global investor sentiment due to the actions and anticipated deeds of the world’s two major central banks. The European Central Bank led the way on Thursday by announcing that it is set to introduce a new bon d purchase scheme which will allocate an ‘unlimited’ pot of funds to buying up the gilts of debt-burdened eurozone states. This elicited the return of a ‘risk on’ trading environment, which favoured the risk-sensitive South African Rand. The positive mood amongst investors lasted into this week, as market participants factored-in a high chance that the Federal Reserve’s latest policy announcement, due out this afternoon, will bring a third near-term tranche of Quantitative Easing in the States. These factors took the GBP ZAR exchange rate to the brink of the 12s on Monday afternoon, as the pair traded down to 13.0151.
However, the market has moved dramatically against the Rand in the 72hrs which followed. The South African tender has lost almost 4.2% of its value against Sterling in the intervening period, as fears grew over the effects which escalating levels of civil unrest will have on South Africa’s economy. Yesterday’s news that striking miners have set up road blocks stopping the movement of workers and materials in and out of mines belonging to the country’s leading platinum extraction company, Anglo American Platinum, have been particularly damaging to the Rand. With recent data releases indicating that the ongoing employment dispute is starting to negatively affect the real economy in South Africa, the near-term outlook for the Rand appears relatively negative. However, the situation remains volatile and future price action is notoriously difficult to predict for the ZAR. If today’s FOMC policy announcement does bring more QE for the States, then the GBP ZAR rate could quickly re-trace to sub 13.00 levels once more. For these reasons, clients needing to purchase Rand might be wise to consider taking care of at least a percentage of their requirement sooner rather than later at the current top-of-the-range rates.
Summary of major upcoming data releases that we think may move the market.
- Pound to South African Rand Exchange Rate Forecast: The South African Rand was under pressure at the start of last week’s session
- Pound to South African Rand Exchange Rate Forecast: The South African Rand ended last week’s session with a flourish
- Pound to South African Rand Exchange Rate Forecast: The Pound followed a steady decline against the South African Rand
- The South African Rand began last week’s session in go-ahead mood
- Pound Sterling to South African Rand Foreign Currency Exchange Rate Forecast – Rand up on Record Gold Prices