South African Rand Supported By Reserve Bank?s Decision To Hold Domestic Interest Rates, Euro Still In Trouble

Published: Thursday, 24 May 2012 18:00 BST - Written by Toni Johnson

STORY LINK South African Rand Supported By Reserve Bank?s Decision To Hold Domestic Interest Rates, Euro Still In Trouble

Britain continued to give the impression that it is an economy under pressure during today’s session, as the latest Q1 GDP growth estimate was revised downwards from -0.2% to a worryingly weak -0.3%. The only factor stopping the Pound loose more ground than it did on the day was that other economies have even greater problems. That’s hardly a cause for celebration though.

The UK growth data was starkly in contrast to that of Germany; Q1 GDP figures for the Teutonic powerhouse economy were released earlier this morning and showed a finalised level of growth of 0.5% - numbers that investors holding Sterling-denominated assets can only dream of. However, it was far from good news all the way for the euro, as the latest whole-of-eurozne PMI survey showed at its lowest level for almost three years. Increasingly, the eurozone appears divided into two separate economic areas – Germany and those that are not Germany. This can only spell bad news for the region’s future prospects.

The US Dollar once again put in a respectable showing on the day – it could have been better were it not for mixed messages sent out by global stock markets. European equities pushed forward, however North American stocks registered pronounced losses. Investors may get a clearer picture regarding market participants’ attitude towards risk before tomorrow afternoon’s weekend close.

Elsewhere, the South African Rand has edged ahead against the Pound, seeing the GBP ZAR exchange rate dip to 13.0126 in early trading. The Rand was supported by the South African Reserve Bank’s announcement earlier today that it would be maintaining its key repo rate at its current level of 5.5%. Some analysts had factored-in an outside chance that the SARB would surprise the markets by trimming rates.

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