GBP/ZAR Exchange Rate Firm; South African NUMSA Strike Turns Violent
The Pound (GBP) to South African Rand (ZAR) exchange rate was trading between the boundaries of 17.9777 and 18.1418 on Thursday, following political instability in South Africa and a lack of interest rate hikes in the UK by the Bank of England (BoE).
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The Pound is trading amid discussions of the vote for Scottish independence, which would inevitably alter the Pound if Scotland decides to leave the UK. Further speculation has arisen regarding Scotland’s currency if they exit the current UK union.
Scotland’s First Minister Alex Salmond has stated: ‘We will keep the Pound… because it is our Pound as well as England’s Pound. It’s logical and desirable to have a currency union because England is Scotland’s biggest export market and Scotland is England’s second biggest export market.’
Salmond continued: ‘This is Scotland’s Pound, it doesn’t belong to George Osborne […] it’s been built up by the people of Scotland over a long period of time.
Conversely the Rand is presently trading as South Africa works through complications resolving the end of the National Union of Metalworkers of South Africa (NUMSA) strike.
The National Employers Association of South Africa (NEASA) has locked out members from the strike attempting to return to work.
Despite NUMSA members signing a contract to end the strike following government intervention last week, further meetings have been scheduled for today to determine the end of all work stoppages.
The Steel and Engineering Industries Federation of South Africa (SEIFSA) have stated: ‘The Bargaining Council will, in the next two weeks, convene a management committee meeting to ratify the settlement agreement, confirm the position of the two outstanding SEIFSA associations, and adopt a resolution to have the agreement extended to all non-party employers and employees in the industry.’
The Rand may gain some stability following the final resolution of these strikes, whilst the fragile South African economy also awaits the meeting’s decision on Friday to determine Rand movement.
The Rand saw positive reactions on Thursday to the release of Manufacturing Production data which rose by 0.5% in June year-on-year, usurping the forecast -1.09%.
Next week will prove highly influential for the Pound as inflation data is due for release, however until the Bank of England meeting minutes are made public, speculation will surround the UK’s ability to enhance interest rates.
Friday has seen the GBP to ZAR exchange rate trade between the boundaries of 18.0241 and 18.2045 thus far.
Today is scheduled to resolve the remaining disputes amongst strike members and employees in South Africa, in the hope of the work stoppage being quelled entirely, and therefore gaining some stability for the South African economy.
However, the NUMSA strike appears to have escalated violently following the deaths of three of its shop stewards in KwaZulu-Natal.
The police have stated the following: ‘We can confirm an incident that occurred on 6 August… where three men aged between 31 and 36 were allegedly shot and killed.’
In response, NUMSA KwaZulu-Natal representative Mbuso Ngubane stated: ‘NUMSA out rightly condemns what looks like a well-calculated and dastardly killing of its three shop stewards.’
As the South African strikes remain unsettled with new reports of violence, the Rand is likely to remain volatile for longer in the currency market.