SOUTH AFRICA

It’s been a strong end to the week for the ZAR as risk appetite increased on the back of the G20 meeting and the decision to inject $1.1 trillion into the world economy.

The ZAR started of weaker as it followed the Euro and risk aversion increased, falling back to 9.80 against the USD. Volatile markets added to the weaker Rand; however it made a comeback after data released showed SA’s trade deficit was decreasing. From there the ZAR did not look back as it continued strengthening as investor’s risk appetite increased, suggesting the crisis might have bottomed out.

Let’s briefly look at the main factors that affected the ZAR over the last week:

• The ZAR holds a massive 9%+ yield advantage against other currencies. This makes it attractive to buy and hold ZAR.
• Rand still following Euro, weakened as ECB cut interest rates.
• ZAR strengthens on the back of the G20 meeting
• Political stability in SA backs the strong Rand ahead of elections.

SA national newspapers suggested that the NPA will drop charges against Zuma causing political risk to diminish and the Rand to strengthen ever so slightly. As risk aversion decreased, the safe havens of the USD and Yen weakened, causing most currencies (incl the ZAR) to strengthen as investors are willing to take on risks.

View for the week: The sangoma has revealed that the bones in her basket are indicating that the GBP will continue to strengthen against the USD; this of course is better for sending money home!

9.80 – Last Week’s High, March 30th
9.03 – Multi-day Low, March 31st
8.98 – Current Spot Price (support level 8.80)

Good luck for the week ahead.

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