South African Rand feels new l

South African Rand feels new lows

The South African Rand continues to reach record lows last seen in 2011 as investors sell off their emerging market stock amid reductions in the Federal Reserve stimulus.

South African Rand feels new l

ZAR graph 03-02-13

THE selling of the Rand has mostly been in response to fears in emerging markets; stronger economies showing signs of stabilisation are looking for safer investments and potential growth.

The South African Reserve Bank has raised interest rates to try and slow currency weakness. However, this has had little effect so far. Interest rates have climbed from 5% to 5.5%, making it slightly more attractive to hold funds in an account.

The weaker Rand would normally lead to increased exports, one of the benefits of a falling currency. This has not been the case in South Africa, as inflation in SA is generally higher than the country’s competition. Although the weaker Rand boosts sales, prices in SA are already so high that we cannot see the advantage at this point.

Meanwhile, on the beaches of SA, many tourists from gloomier regions are enjoying the heat and taking full advantage of cheap drinks and food. Many will see their budgets taking them a lot further than they thought possible just a few months ago.

GBP / ZAR: 18.3752

EUR / ZAR: 15.0930

USD / ZAR: 11.1891

NZD / ZAR: 9.06329

Exchange rates as of 08:32 (GMT), 27/01/2014

Composed by Damian Sutherland

Note: The above exchange rates are based on “interbank” rates.
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