GBP ZAR And GBP NZD Exchange Rates Soar

Published: Friday, 31 May 2013 09:00 BST - Written by Ben Hughes

STORY LINK GBP ZAR And GBP NZD Exchange Rates Soar

Yesterday’s session brought significant price action for more than one of the sixteen most actively traded global currencies. Leading the way as the major market mover of the day was the South African Rand, which was trading down by 3.00% against the Pound Sterling at one point. The sharp move higher to 15.2770 for the GBP ZAR exchange rate (currency : GBP ZAR), which represented the pair’s highest level since December 2008, was attributable entirely to Rand weakness. Selling pressure on the South African tender was triggered by a notable ‘mis-speak’ by the nation’s President Jacob Zuma, who informed the assembled gentlemen of the press that ‘only in undemocratic countries are there no strikes’. The jaw-dropping comment, which follows month of bloody labour market unrest in the troubled African nation, caused investors to reel away from the Rand in disbelief. Market participants had been expecting Zuma to outline proposals to deal with unrest between mine owners and their employees and perhaps some soothing words regarding his nation’s future growth prospects following the release of a disappointing set of Q1 GDP data earlier in the week.

Weaker than anticipated US GDP Q1 data and weekly Initial Jobless Claims data, also released in the States would ordinarily have triggered further selling pressure on high-yielding currencies including the Rand. However, the benchmark Dow Jones Industrial Average index closed slightly up on the day. Increasingly, bad economic news from the US is proving to be good news for equities, as traders react to such releases by pricing in a lower chance that the US Federal Reserve will begin to unwind its quantitative easing programme.

In spite of the weak US numbers, the high-yielding commodity-driven New Zealand Dollar was another of the ‘big 16’ to suffer on the day, giving up slightly more than 1% of its value against the Pound by the latter part of yesterday’s European session. The shift out of Kiwi-denominated assets was driven by comments from Reserve Bank of New Zealand Governor Graeme Wheeler who publicly stated that his Bank will be dumping more NZDs on the global currency market in an effort to boost domestic exporters. There could be further gains to come today fro the Pound to New Zealand Dollar exchange rate (currency : GBP NZD) later today.

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