Rand Exchange Rate Today: GBP & USD to ZAR Soften but EUR Holds Firm

October 8, 2014 - Written by David Woodsmith

STORY LINK Rand Exchange Rate Today: GBP & USD to ZAR Soften but EUR Holds Firm

The Pound to Rand exchange rate (GBP/ZAR) continued to weaken today as the latter currency recoups some of Tuesday’s losses. The Rand slipped yesterday on the news that South African Foreign Reserves had tumbled to $49.13 billion from $49.76 billion.

As economists had forecast a smaller dip to $49.47 billion, the actual figure saw the Rand slide.

The Pound Sterling to Rand exchange rate is -0.17 pct lower today at 1 GBP is 17.81667 ZAR.
The Euro to Rand exchange rate is holding steady at 14.04709 EUR/ZAR.
The US Dollar to Rand exchange rate is trading up +0.36 pct at 11.11018 USD/ZAR.

South African Rand (ZAR) Rate Fluctuates during Influential Week

This week has been an interesting one for the Rand. Monday saw the naming of the successor to the current South African Reserve Bank (SARB) Chairwoman, Gill Marcus. The appointment of Deputy Governor Lesetja Kganyago was well-received by markets, who believe monetary policy will remain on the same trajectory after Marcus steps down in November. Marcus is hailed as having a positive influence on South Africa’s economic recovery after guiding the nation through such tricky five years.

Upon announcing her retirement, Marcus commented that the central bank housed many candidates suitable for the position, although President Jacob Zuma held the overall choice. Zuma’s choice for the Deputy Governor suggests trust in the central bank’s decisions and current course of action. Kganyago commented: ‘I’ve been there. I’ve seen it before. It seems that whenever there has been a difficult choice to make, I get called on. I will not disappoint you.’

Economist Gina Schoeman believes that confidence in the central bank will remain throughout the transition, set to take place November 8th. Schoeman commented: ‘We believe DG Kganyago is well respected by markets and though “prudently hawkish” is also inclined to give due respect to GDP prospects.’ Kganyago also worked with the Finance Minister Nhlanhla Nene for a long period of time, which has helped him gain the Chair position of the central bank.

Data released on Tuesday showed that South African Foreign Reserves fell in September, and the Rand softened accordingly. Furthermore, the Rand is likely to trade lower ahead of Thursday’s Mining Production figures. The mining sector took a hit this year with strikes running for over five months. South Africa’s strike culture has shaken the Rand with the full effect on the nation’s economy remaining to be seen. Mineral Resources Minister Ngoako Ramatlhodi commented: ‘Strikes are not a unique South African phenomenon. However, when it runs into a period of five months it’s a wake-up call to all stakeholders.’

The platinum mining strike cost the South African economy dearly and many feared the country may enter recession.

However, Wednesday has seen a new move to boost eco-tourism by South Africa’s Kruger National Park.

The park is offering investors the chance to bid on batches of 20+ rhinos.

As South Africa suffers from poaching, national parks are attempting to move over 500 of the animals to safety. The prospect could increase eco-tourism to the area which could help the economy; however, the idea doesn’t have universal popularity. Private Rhino Owners Association Chairman Pelham Jones commented: ‘You are asking someone to put a large amount of money on the table in a speculative venture.’

Rand to Pound and Euro Exchange Rate Forecast

Thursday will be highly influential for the Rand with the release of both South African Mining and Manufacturing Production figures.

The Pound, meanwhile, will also experience movement on the latest announcement by the Bank of England (BoE) regarding interest rates.

Although the BoE is expected to keep borrowing costs at 0.50%, any remarks made by policymakers could have a direct impact on the Pound.

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