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Pound Weakens Against South African Rand As US Dollar Softens

April 21, 2015 - Written by Frank Davies

Pound Weakens Against South African Rand As US Dollar Softens



The Pound weakened against the South African Rand in a session that was devoid of any market moving economic data releases. Early in the session, the Rand weakened to a 1-week low against the US Dollar, as the global markets grew increasingly concerned that Greece could default and leave the Eurozone. Fears that a Greek exit out of the currency bloc could have a significant impact upon the wider global economy caused investors to turn away from riskier emerging market currencies and seek the relative safety of the safe haven US Dollar.

As the session progressed, the US Dollar gave up its earlier gains as economists raised their bets that a recent run of disappointing US data will cause the Federal Reserve to leave interest rates unchanged until later in the year. Initially economists had been forecasting for rates to rise in the summer.

UK Political Uncertainty Weighs on Pound Sterling



The Pound meanwhile softened against most of its major peers due to concerns over the outcome of next month’s general election. With neither the Tories nor Labour set to win an outright majority, nerves are increasing as to what form a coalition government could take. The Scottish National Party is expected to win enough seats to make it kingmaker but with neither Labour nor Conservatives publicly willing to agree to such a deal, uncertainty has risen.

The SNP were branded a threat to the unity of the United Kingdom by former Prime Minister John Major, as the party has made no secret that it wants Scotland to be independent from the rest of the union.

South African Army Deployed



The South African Rand may have made gains against a number of peers in the session but it is unlikely to hold onto them as civil unrest in the nation continues to deteriorate. The nation’s government has ordered the army to be deployed in order to halt the wave of attacks that have taken place against immigrants. The violence has led to the deaths of seven people and has seen a number of properties damaged or destroyed.

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‘We come in as the last resort; the army will serve as a deterrent against the crime that we see. There are people who will be critical but those who are vulnerable will appreciate this decision. Now we are deploying because there is an emergency,’ said South African Defence Minister Nosiviwe Mapisa-Nqakula.


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