Last week saw a poor performance from the Rand against both the USD and GBP. In other pairings, the ZAR was often on the weaker side of the exchange rate.
Wednesday’s September retail sales were better than most economists’ consensus, however the fact that President Jacob Zuma had dodged another attempt to see him ousted from power had a net negative impact on the ZAR.
The Rand was further restrained by news indicating a high chance of a December Fed interest rate hike in the US.
The increased cost of borrowing from the US, reflected in US yields, as well as the rising USD will increase repayments for South African businesses with US loans. A sharp rise of yields in the UK and US after Trump’s victory has seen repatriation flow of capital out of South Africa, pushing the Rand lower.
“Essentially the currency is still at the mercy of global forces and this strong Dollar trend that has prevailed since Donald Trump was elected,” Standard Bank trader, Warrick Butler said in a note.
What to look out for this week: Expect a particularly interesting one for ZAR movements. Outside factors such as the USD currently hold a greater sway over ZAR investors. Locally, the South African Reserve Bank announces its interest rates decision on Thursday and Moody’s Credit Rating Review on Friday will surely impact the Rand.
Wednesday will see the October inflation rate announced; the only change expected is a monthly rise from 0.2% to 0.3%.
On Friday, South African Q4 business confidence figures will be released. The index is predicted to show a rise from 42 points to 44.
– Calvin Matsaure