Pound to Rand Exchange Rate Today - GBP/ZAR Huge Gains, Rand Slumps vs Euro (EUR), US Dollar (USD) and HK Dollar (HKD)

September 16, 2014 - Written by Ben Hughes

STORY LINK Pound to Rand Exchange Rate Today - GBP/ZAR Huge Gains, Rand Slumps vs Euro (EUR), US Dollar (USD) and HK Dollar (HKD)

The Pound to South African Rand (GBP/ZAR) exchange rate has fcontinued to fall over the course of this week as confidence in Sterling dips before the Scottish referendum on Thursday.

The Rand has also softened against a basket of currencies such as the Pound Sterling (GBP), Euro (EUR), US Dollar (USD) and HK Dollar (HKD) in anticipation of Wednesday’s South African Inflation Rate and the potential downgrade by credit ratings agency Standard and Poor’s.

All major currencies have weakened in recent months next to the bullish US Dollar (USD), which has gained momentum through upbeat data and hopes that interest rates will be increased soon.

The latest conversion rates for the SA currency are as follows:

- The Rand to Australian Dollar exchange rate is trading up +0.22% at 0.10114 ZAR/AUD.
- The Rand to Canadian Dollar exchange rate is trading down -0.84% at 0.09974 ZAR/CAD.
- The Rand to Euro exchange rate is trading down -0.45% at 0.07041 ZAR/EUR.
- The Rand to Pound Sterling exchange rate is trading down -1.03% at 0.05577 ZAR/GBP.
- The Rand to Hong Kong Dollar exchange rate is trading down -1.1% at 0.70258 ZAR/HKD.
- The Rand to New Zealand Dollar conversion rate is trading up +0.13% at 0.11204 ZAR/NZD.
- The Rand to Dollar exchange rate is trading down -1.1% at 0.09064 ZAR/USD.

South African Rand Pressures to Affect the Exchange Rate

The South African Rand has faced a difficult year, with 2014 witnessing a total of seven months of strikes in both the platinum mining and metalworking sectors. However, prestigious credit ratings agency Standard and Poor’s has stated this week that they may downgrade South African power giant Eskom Holdings SOC Ltd. Providing almost all of South Africa’s power supply, Eskom has seen the government come to its aid, providing support and an investment of capital. The South African Treasury stated: ‘Cabinet approved a package to support a strong and sustainable Eskom to ensure that the energy security of the country is maintained, as well as supporting gross domestic product growth.’

The Treasury have clarified that the capital injection will be ‘an allocation of funding [which] will be given to Eskom to help relieve the impact on electricity consumers, as well as add additional support to Eskom’s balance sheet.’ Overall the equity injection could affect South Africa’s sovereign rating, which will have an effect on the Rand’s position against other major peers. Macroeconomic expert Razia Khan commented: ‘While it is difficult to see any alternative for the South African government other than to support Eskom, the latest announcement, although still vague on the amounts involved, may crystallize some of the rating outlook fears for the sovereign.’

The Rand has dropped versus the US Dollar this week to its lowest level since mid February on the Eskom news, and also in anticipation of the South African Inflation Rate figures due on Wednesday. July’s inflation reached 6.3%, whilst economists are currently forecasting a dip in August to 6.2%. The US Dollar has pushed many currencies lower as the Federal Reserve becomes more likely to announce the timeframe for increasing borrowing costs. Analyst John Cairns stated: ‘If they do, [hike rates] expect a push higher in US yields and a push stronger in the Dollar—and significant Rand weakness.’

Pound Faces Referendum Debate Pressuring Sterling Lower

Conversely, the Pound has experienced large fluctuations in its exchange rates against other majors in recent months.

Sterling is on a rocky trajectory until the outcome of the Scottish vote for independence is announced, whereby Scotland could experience what Prime Minister David Cameron has called a ‘painful divorce’ away from the UK.

Cameron, however, has made it clear that any breakaway from the UK will be permanent for Scotland.

Cameron stated: ‘If you don’t like me—I won’t be here forever. If you don’t like this government—it won’t last forever. But if you leave the UK—that will be forever.’

As Thursday’s referendum approaches, the Pound will face fluctuations. Rand movement, however, may be limited before Wednesday’s inflation data.

Pound Trading Higher against South African Rand (GBP/ZAR) ahead of BoE Minutes

The Pound to South African Rand exchange rate has seen gains on Wednesday as investors eagerly await the Bank of England’s Meeting Minutes. Furthermore, Wednesday will also see the release of Average Weekly Earnings, Claimant Count Rate, Employment Change, Unemployment Rate, Jobless Claims, and Weekly Earnings figures.

The South African Rand is also seeing the effect of domestic Inflation Rate figures which were forecast to dip in August on a yearly basis to 6.2%, from July’s 6.3%.

The actual figure, however, saw inflation rise to 6.4% which may have an effect on upcoming interest rate decisions by the South African Reserve Bank. Thursday will be an influential day for the Pound with the Scottish referendum taking place.

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