South African Rand (ZAR) Exchange Rate Achieves 2014 High
Although South African economic data is limited until Thursday, the Rand to US Dollar was able to advance on Tuesday. The Rand also made gains against several of its other major peers.
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The commodity driven Rand jumped by 0.6 per cent against the ‘Greenback’ this morning, wiping out its 2014 decline against its US counterpart and achieving its highest level of the year.
Ever since the South African Reserve Bank shocked markets by introducing an interest rate increase at the end of January the Rand has been steadily gaining strength and the currency is riding high at the moment.
This morning a Rand Merchant Bank trader was quoted as saying; ‘It is emerging markets strengthening really, it is a continuation of the trend, we were struggling to get through 10.50, but we have come in this morning and broken it’.
The Bank also commented; ‘Most emerging markets and other higher-risk currencies are like the Rand – pushing at the stronger-end of the recent range.’
The US Dollar, on the over hand, has come under pressure as a result of less-than-impressive US employment figures and speculation surrounding the prospect of the Federal Reserve continuing with the steady tapering of stimulus.
The Rand was also stronger against the Pound today in spite of the fact that UK industrial/manufacturing output reports surprised to the upside – implying that the nation’s economy put on a fairly valiant performance in the first quarter of the year.
Rand volatility can be expected on Thursday when South African mining and industrial production data are published, but in the meantime global economic developments could have an impact on the currency.
US reports will be of particular interest, especially the minutes from the latest Federal Open Market Committee meeting (due out on Wednesday at 19:00 GMT).
The Rand is currently trading against the US Dollar in the region of 10.4040 and trading against the Pound in the region of 17.4346.