After the previous week’s poor performance, the ZAR made a comeback as the Euro posted gains against the USD. The Rand also gained on the back of the Dow Jones gaining 5.8% overnight on Tuesday.

The stronger markets restored faith as US newswires reported that stocks were gaining and banks were hopefully stabilizing. Global markets followed suit and continued to trade higher, restoring confidence in investors.

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

- The ZAR holds a massive 10%+ yield advantage against other currencies. This makes it attractive to buy and hold ZAR.
- Hopes for a emergency rate cut is fading, causing the ZAR to strengthen.
- Reduction in risk aversion causing ZAR to strengthen
- ZAR is focusing on EUR/USD;

Manufacturing production fell by over 11% in January which emphasises the global economic slowdown. Retail sales figures will be released on 18/3, which would indicate the effect of the slow down on the general public.

As global markets found some stability, the Gold priced dropped slightly; causing the Rand to lose some of its gains.

10.64 – Last Week’s High, March 10
9.93 – Multi-day Low, March 13
9.88 – Current Spot Price (support level 9.70)

View for the week: As the ZAR is still weak against the USD and no light in sight in the dark tunnel of the credit crunch, we should expect it to weaken further if the GBP makes a comeback.

Good luck for the week ahead.

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