On Tuesday, the Rand strengthened against all major currencies as investors pursued greater returns in emerging markets after the failed coup in Turkey. This resulted in the following movements for the Rand against the major currencies on Tuesday morning (19 July 2016):
On Thursday, the South African Reserve Bank kept the repo rate at 7%. In light of the fact that South African interest rates would remain high this year, the Rand continued to strengthen against the Pound and remained steady against the Dollar, as investors were enticed by the prospect of higher yields.
What to look out for this week: On the domestic front there is a lot of data being released this week. Stats SA will be releasing the national unemployment rate for Q2:2016 on Thursday. The M3 money supply and private sector credit extension is due out on Friday while the PPI print for June is on Wednesday.
In addition to this, the Treasury will release its South African budget data for June on Friday. This release traditionally has a profound impact on the Rand. The week will end off with SARS announcing the trade balance figures for June.
In the United States, the Board of Governors of the Federal Reserve will be releasing their interest rate decision on Wednesday. Alterations in the current interest rate will cause significant changes to the value of the Rand. Right now markets are only pricing in a 10% chance of a hike at this meeting.
– Divesh Govender