The ZAR won back some of its l

Making money

The ZAR won back some of its losses

The market reflects the Rand rising against the Dollar and the Pound

The ZAR won back some of its l

Making money

Last week we saw Rand appreciation against the greenback occurring in line with Dollar weakness against all of the major crosses, with the biggest move seen against the Euro (0.5 percent). While the Rand strengthened against the Dollar and the Pound, it weakened against Euro and the Yen. Strengthening of the local currency against the Dollar occurred into a mixed to stronger performance from the commodity and EM currencies we monitor for purposes of this report.

Towards the end of the week, rating agency Moody’s downgraded the South African sovereign rating to Baa2 from Baa1 on both a local currency (LC) and foreign currency (FC) basis.  The agency also revised the outlook to stable, from negative. We believe that the downgrade by Moody’s should come as no surprise to the bond market. Naturally, this caused the ZAR to weaken to its lowest point in five weeks.

Moody’s has been conducting a country assessment for some time and, given that South Africa’s rating outlook was on a negative watch with the rating agency before Thursday’s downgrade, the probability of a rating downgrade was always significant. The Rand was the worst-performing commodity currency and the third-worst in the EM category.

On late Friday through to Monday, the ZAR won back some of its losses as US job data disappointed adding 214,000 jobs compared to an expected 231,000, resulting in lower investor confidence in the US economy and putting a damper on global markets.

This week will see some important statistics released in SA – the latest manufacturing output data on Tuesday, retail sales on Wednesday and mining output data on Thursday.

GBPZAR @ 17.7951

USDZAR @ 11.1924

EURZAR @ 13.9722

GBPUSD @ 1.5898

EURUSD @ 1.2484

GBPEUR @ 1.2735


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