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The Rand holds on despite negative press

The Rand has managed maintain most of the gains it made against the major currencies in the first week of April. However, consistent negative sentiment has been keeping the local currency from breaking below the 14.50 level.

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When asked whether the ZAR may recover to trade back below 13.00 to the USD, many analysts and pundits have said that this would be unlikely. Potential downgrades from international ratings agencies, President Jacob Zuma’s apparent impunity as well as a mixed bag of data releases since the beginning of the year have left investor sentiment in South Africa at an all-time low.

Despite this, in the last two weeks there has been a gradual improvement on trading rate for the Rand against most major crosses, closing trade on Friday at 14.5784 to the Dollar, 16.4516 to the Euro and 20.7082 to the Pound. Global markets have been heavily saturated with repetitive data and, as a result, data releases from both the UK and China have had little effect on trade.

What to look out for this week: South African inflation data is due to be released on Wednesday. The consensus is that the rate will retreat from the 7.00% reading in February, to a level closer to 6.35%.

Lesetja Kganyago, Governor of the Reserve Bank, has also stated that SARB will tolerate high inflation for short periods, but will move decisively if needed to.

-Chris Williams

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