Investors are concerned about

Investors are concerned about the effects load shedding will have on the Rand

The Rand heads for drop despite increasing against the dollar last week

Investors are concerned about

After strengthening against the US Dollar on Friday 14 November, Rand appreciation against the Dollar continued into last Monday despite Dollar strength against most of the major crosses – the Dollar gained ground against the Pound and the Yen, but weakened against the Euro. Rand strength on that Monday and Tuesday afternoon saw the 11.00 level being tested; a key psychological support level. Mining houses were big sellers on the day, and the weaker Dollar edged the Rand to strong levels.

Low oil prices are widely expected to keep CPI within the Central Bank’s target band and so interest rate expectations were likely to remain at 5.75%; as it did.

The Rand weakened against the Pound and Euro on Wednesday and strengthened against the Yen. Depreciation of the local currency against the Dollar occurred alongside weakness among all the commodity currencies we monitor, and a mostly weaker performance amongst the EM currencies we look at for the purposes of this report. The Rand put in the best performance among the commodity currencies, and took up the middle ground in the EM category.

As the SARB left interest rates unchanged, the Rand continued to advance due to support from stronger government bonds. Improved investor confidence and continued low interest rates in Europe and Japan further fuelled the Rand appreciation.

This Monday morning, the Rand was trading at levels against the USD that were close to the three week high. This looks like an interesting week for the Rand as investors show concern over load shedding and await Tuesday’s GDP figures. It is expected that the economy only grew by 1.3% in the third quarter this year.

 

USDZAR @ 10.9589

GBPZAR @ 17.1656

EURZAR @ 13.5889

GBPUSD @ 1.5664

GBPEUR @ 1.2632