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Rand Forex Forecast - ZAR to GBP & EUR Exchange Rates Advance Ahead of Fed Meeting

October 28, 2014 - Written by David Woodsmith

The South African Rand (ZAR) exchange rate strengthened against the UK Pound (GBP), Euro (EUR) and other major peers as demand for riskier assets increased ahead of the Federal Reserve’s October policy-meeting outcome.



gbp eur forecastConfidence in emerging markets increased causing risk on trading which sent currencies like the Rand, Rupee and Lira higher against the big currencies.

The South African Rand in particular has been on a firmer footing since Finance Minister Nhlanhla Nene vowed to get the nation’s budget deficit under control.

The strong language raised economist hopes that the credit ratings agencies would refrain from downgrading South Africa’s sovereign credit rating.

Today's Exchange Rates



The South African Rand to Australian Dollar conversion rate is +0.4 pct higher at 0.10407 ZAR/AUD.
The South African Rand to Canadian Dollar exchange rate converts +0.25 per cent higher at 1 ZAR is 0.10295 CAD.
The South African Rand to Euro exchange rate converts +0.71 per cent higher at 1 ZAR is 0.07237 EUR.
The South African Rand to Pound Sterling exchange rate converts +0.9 per cent higher at 1 ZAR is 0.05712 GBP.

The currency also received support from the release of mixed economic data from the United States of America.
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Data released by the Washington based Commerce Department showed that durable goods orders fell unexpectedly in September by 1.3%. Economists had been forecasting for a rise of 0.5%. Core durable goods orders meanwhile made their biggest decline in eight months by falling 0.2%.

Traders are now focused on the conclusion of the Federal Reserve’s Policy meeting for October. They are widely expecting Fed policy makers to announce the ending of the massive monthly bond buying programme and signal that they are not yet ready to vote in favour of increasing interest rates.

‘The Rand is trading firmer in line with most emerging market currencies with the Turkish Lira doing well amid a risk on scenario,’ said currency trader Jim Bryson from Rand Merchant Bank.

Pound Sterling to Rand Falls Today



The Pound meanwhile remained under pressure from comments made by one of the Bank of England’s new deputy governors. In an interview with the Financial Times Minouche Shafik said that there is no significant evidence to warrant the BoE’s policy makers voting in favour of cutting interest rates.

‘If you look at what we would expect to see at this point in the recovery, the increases in wages that we have seen have not been significant. We would need to see more of the data pointing in the same direction in terms of price pressures particularly in terms of wages and unit labour costs. In terms of sustained domestic inflationary pressures, that’s going to be the ultimate test,’ Shafik said.

With no market moving UK data due until the end of the week the movement of the GBP/ZAR exchange rate will all depend on events in the USA, Europe and geopolitical events.

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