SOUTH AFRICA

The Rand started the week strong before losing some ground in late Friday trading as risk aversion increased and stock markets went down again. With GM and Chrysler seeking additional funding from the US government, one has to assume the economic crisis is far from over.

The Rand was unmoved by last week’s 1% interest rate cut in SA and the latest PPI (inflation) figures which suggests inflation has come slightly down. The ZAR has followed the Euro for most part, which was very strong against the Dollar, before weakening towards the end of the week.

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 following EUR/USD which is slightly weaker due to expected ECB rate cuts on Thursday
• Risk aversion still has a massive influence over emerging markets
• Investors starting to look at April 22 elections.

Next week is sure to be a busy one with not only the ECB and BoE interest rate decisions, but also the G20 meeting. While the general public may be sidetracked by hippies protesting outside banks, many investors will eye the decisions made at this meeting. On Friday the US will release its nonfarm payroll reports, which will also influence the ZAR.

View for the week: The Rand remains volatile as usual and for the moment seems to be following the Euro. With the USD expected to strengthen against the Euro on the back of interest rate cuts, it might be a good idea to keep a watch out for the ZAR towards the end of the week.

9.60 – Last Week’s High, March 27th
9.34 – Multi-day Low, March 26th
9.72 – Current Spot Price (support level 9.50)

Overheard on the trading floor: Well, all currencies are as volatile as kids at the moment, but you know what? The USD remains the biggest kid in the class!

Good luck for the week ahead.

Exchange4free FX Dealers : 0207-858-1039

- Book a live exchange rate online
- Great exchange rates
- No transfer fees
- Zero commissions

www.exchange4free.co.uk