South African Rand (ZAR) Exchange Rate Lower against Pound, US Dollar; Strike Continues
With no end to the strike in the metalworkers sector in sight, the South African Rand (ZAR) exchange rate was trending in a weaker position against peers like the British Pound and US Dollar.
If you're looking to make an international money transfer, we recommend TorFX.
A lack of influential economic reports from the UK and US did restrain currency movement today, but the Pound was still able to hold a 0.2% gain against the Rand, with the GBP/ZAR pairing trading between highs of 18.4000 and lows of 18.2680.
The USD/ZAR exchange rate hit a high of 10.7473 in spite of concerns that Federal Reserve Chairwoman Janet Yellen will deliver a dovish testimony tomorrow.
The appeal of the Rand was quashed before the weekend after the National Union of Metalworkers of South Africa (NUMSA) rejected the offer of a pay increase, taking the sector strike into a third week.
Given the severely detrimental impact the five-month long strike in the platinum sector had on South Africa’s economic performance, investors are hoping that this strike will be resolved far more swiftly.
According to currency analyst John Cairns; ‘The Rand faces risks from numerous central bank events this week but the bias of probabilities is still for dampened range-bound trade. Meanwhile, against hopes, the NUSMA strike has still not ended – although the news that the union has reduced its wage increase demand is at least positive.’
While strike developments are likely to be the main cause of Rand movement this week, there are two influential South African economic events to be aware of over the next five days, the nation’s Retail Sales report and the South African Reserve Bank interest rate decision.
It is expected that the retail sales figures will show a month-on-month decline of 0.8% in May following stagnation in April, with sales being up 2.5% in the year.
The SARB is expected to leave the benchmark interest rate at 5.5%.
The commodity-driven South African Rand could also be affected by news from China, including the nation’s Industrial Production figures, Retail Sales report and second quarter GDP figures.
Investors with an interest in the Pound to Rand (GBP/ZAR) pairing will also be focusing on the UK’s highly influential Consumer Price Index and employment data.
If the reports support the case for an interest rate increase from the Bank of England, the Pound could achieve fresh highs against its peers.
Similarly, movement in the US Dollar to Rand (USD/ZAR) exchange rate could be driven by US Advance Retail Sales figures.
A 0.6% month-on-month sales increase would be ‘Greenback’ supportive.
The South African Rand is currently trading against the US Dollar in the region of 10.7215 and trading against the Pound in the region of 18.3090.