Getting the best exchange rate can be achieved by understanding what is driving rates and the service of a specialist currency broker. Below are movements in just a month affecting South African Rand rates when buying £200,000 at the high and low points of the past month:
|Currency Pair||% Change||Difference on £200,000|
The cost to buy South African Rand has fallen significantly in recent months and reached the cheapest for the last 12 months only last week. Political uncertainty in RSA has certainly been a big factor on currency, with multiple allegations of corruption in nearly all areas of government. There has been growing concern about the African National Congress leadership battle, their conference takes place in December when the budget for 2018/19 should also be released. The Rand has in fact been the second-worst emerging market performer in the past month as uncertainty about its future peaked. With the growing concerns it has now been suggested that they could well be downgraded by the rating agencies in the New Year, which would be further bad news for anyone with Rand to sell.
Longer term we have their main party conference in December when their 2018/2019 budget measures will be released. Something to take note of if you have exposure for the remainder of the year.
Over this week however the rand has become more expensive to buy. Recently trade balance figures have been improving and inflation has been coming down. On Tuesday, Manufacturing production figures were also released and showed better than expected data. It had rebounded strongly on the year in August, defying expectations that there would be further contraction.
Mining data was also released only yesterday and this showed another improvement. The mining sector in RSA is a major contributor to the economy and is something keenly watched following recent problems with strikes and shut downs. In the most recent figures showed an annual increase of nearly 7%, the August production levels also showed an improvement of 7.7% compared to 5.8% in July. Gold, Iron and Diamond mining was where a majority of the gains were seen, not a surprise as these are equally the most lucrative.
Moving forward I would like to think that the positive tone in recent economic data will continue, however traders seem to remain very wary. Personally, I am of the view that due to this level of nervousness we will see GBPZAR either fall slightly or climb widely as any sign of weakness will probably weigh heavily on the rand.
Thank you for reading today’s market report, I would greatly appreciate any feedback you have and would take pleasure in replying personally. I am more than happy to assist you with any of your currency requirements. Feel free to e-mail me at HSE@currencies.co.uk.