US Dollar Exchange Rate Bullish Against Floundering Rand (USD/ZAR); US Awaits Yellen’s Speech
The US Dollar is currently trading against the South African Rand at 10.6980, whilst the US eagerly anticipates Janet Yellen’s speech on behalf of the Federal Reserve this afternoon; meanwhile South Africa tries to contain the latest NUMSA metalworkers strike from growing.
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NUMSA today will be attempting to procure other workers in various sectors, to expand the striking number by another 100,000 in addition to the initial 220,000 members taking part in the current work stoppage.
After employers made an offer at the weekend to NUMSA, the union rejected it on the grounds of being hesitant of signing any contract with the duration of over a year, as the fluctuations in the South African price of living are too liable to shift.
Official NUMSA spokesperson Irvin Jim stated: ‘We have clarified various permutations which we think employers should consider settling the strike and of course they had no mandate to move from the current offer on the table.’
Toyota’s production in South Africa has been hindered, as parts become inaccessible and they have therefore been forced to close some production centres.
Meanwhile General Motors have also closed production lines stating: ‘The strike has impacted upon the supply of components to our production lines resulting in our lines not being operational. We have lost eight days of production.’
Conversely there is increasing speculation as to the content of the speech being made by Janet Yellen this afternoon.
An expert in the field, Hirokazu Kabeya, stated: ‘Markets expect her [Yellen] to stick to the stance that she will guide policy by watching the pace of recovery in the job market and the economy.’
With no interest rate hikes expected in the near future, Yellen could cause the US Dollar to weaken if she doesn’t prove encouraging for investors.
Previously in her April speech Yellen stated: ‘The path of the economy is uncertain, and effective policy must respond to significant unexpected twists and turns the economy may take.’
Tuesday sees the US Advance Retail Sales figures whilst Wednesday will see the South African Retail Sales statistics.
The US data could improve the ‘Buck’, however, with the state of the South African economy and fears of recession circling the currency market; it appears unlikely that the Rand will gain any stability even if the results prove favourable.
The Rand will need to see the unrest in South Africa quelled before it can gain a foundation to build upon against other major currency peers.