South African Rand Today: GBP/ZAR Exchange Rate Rallies; USD/ZAR Exchange Rate Trending Upwards
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The US Dollar to South African Rand exchange rate meanwhile was fluctuating within a narrow spectrum as US markets closed for a national holiday and the risk-aversion which dictated much of the movement in higher-risk assets at the close of last week persisted.
The Rand tumbled against its US peer on Friday as less-than-impressive South African trade figures weighed on South Africa’s economic outlook and the US University of Michigan Consumer Confidence index climbed.
According to Barclay’s Research; ‘The Rand bulls capitulated on Friday as the trade deficit served to re-emphasise South Africa’s considerable external funding requirements.’
Overnight the appeal of the commodity-driven Rand was little-affected by China’s HSBC Manufacturing PMI.
The Pound Sterling to South African Rand (GBP/ZAR) exchange rate hit a low of 17.6400.
The final HSBC index for August was revised from 50.3 to 50.2. A positive revision to 50.5 had been predicted.
Hongbin Qu, HSBC economist, said this of the result; ‘The HSBC China Manufacturing PMI eased slightly to 50.2 in the final reading for August from the flash reading of 50.3. The revisions were mixed, with upward revision to the new export orders and output sub-indices but downward revisions to the employment and input prices indices. […] Overall the manufacturing sector still expanded in August, but at a slower pace compared to previous months.’
During European trading the GBP/ZAR exchange rate was little changed following the publication of the UK’s Markit Manufacturing PMI for August.
The measure for July was negatively revised to 54.8 and the index fell to 52.5 last month instead of achieving 55.1.
The result was a 14-month low and was indicative of slowing growth in the areas of output and new orders.
However, it wasn’t all bad news as employment in the sector did rally again. This marked the sixteenth consecutive month of job creation.
That being said, the tone adopted by David Noble (Chief Executive of the Chartered Institute of Purchasing & Supply) in his accompanying statement was fairly pessimistic; ‘UK manufacturers were walking rather than running in August as the sector’s performance fell to a 14-month low and growth began to slow further. There is a distinct easing across the breath of UK manufacturing, with growth in output, new orders and employment all reducing to a more pedestrian level.’
Pound to South African Rand Exchange Rate Forecast
This week the only really influential economic report for South Africa to be aware of is the KASIGO Manufacturing PMI, due out on Wednesday.
The gauge came in at 45.9 in August, well below the 50 mark separating growth from contraction.
Movement in the GBP/ZAR exchange rate is more likely to be driven by the UK’s high profile reports, including Construction/Services PMI, the British Retail Consortium’s Shop Price Index and the Bank of England’s interest rate decision and inflation projections.
Given that there are no economic data publications pertaining to South Africa on Tuesday the South African Rand is likely to soften versus its major peers.
As traders adopt risk aversion strategies in light of the mounting tension between Russia and Ukraine, demand for the emerging market Rand has dampened considerably.
Tuesday’s manufacturing data for the US will be of high influence over the Indian Rupee t US Dollar exchange rate. Should they hit or exceed the forecast figures it is likely that the Rand will continue to fall versus the Pound and the US Dollar.
The British Pound has firmed up after better-than-forecast manufacturing output. Having been forecast to hit 61.5 the actual data showed an impressive increase to 64.0, which is the fasted manufacturing growth in seven months.