As the Fed printed more US Dollars, demand for USD’s fell causing the currency to weaken against most currencies. The Euro rise was the biggest in a single day since the inception of the single European currency.

Emerging markets welcomed the renewed risk appetite as investors gained confidence. The Rand continues to follow the EUR/GBP for the time being as traders will watch the announcements next week.

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.
• Rand stronger on the back of weak USD after “liquidity injection”
• ZAR more stable as risk aversion decreases and investors take on more risk
• Investors starting to look at April 22 elections.

Next week would be one to watch, as lots of announcements are being made; the US will release its latest plan on buying back toxic assets from the banks and in SA the MPC will sit and discuss the interest rate; it is expected that this will drop by 1%.

Market sentiment still seems the biggest player ito where the ZAR is heading and as usual we see the Rand being very volatile. Many investors believe the elections will have a big influence, however this is more a personal opinion and one of the biggest worries is whether the ANC/Zuma will change SA’s economic policies, as opposed to actual political unrest.

10.01 – Last Week’s High, March 16th
9.54 – Multi-day Low, March 19th
9.44 – Current Spot Price (support level 10.35)

View for the week: the ZAR is still very strong against the GBP and USD, however this doesn’t always reflect the state of the economy. Trade deficit is still huge and we may well see an interest rate cut too. Watch that ZAR closely!

Good luck for the week ahead.

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