The cost of the South Africa Rand has got cheaper by nearly 5% over the last week giving you over ZAR 150,000 more with a £200,000 transfer. Welcome news as GBPZAR had fallen 11% in the previse 3 weeks as the fall-out on the Pound following the referendum was seen. The fall-out from the Brexit vote also resulted in a run to safe haven currencies and commodities like Gold which is a big exporter for South Africa. This resulted in these big falls in the value of the GBPZAR following the 23rd June and why we saw GBPZAR at a near 2 year low a week ago.
Moving forward the value and cost of GBP/ZAR is somewhat tethered to the US Dollar and the decisions made by the FED Chairlady Janet Yellen on Friday of this week. The event at Jackson Hole is widely seen as one of the most influential on the currency market over the coming fortnight and one to watch if you have a RAND purchase to make.
If Yellen signals the possibility of more hikes than the market currently expects, we could see a strong rally for the USD and there fall a fall in the Rand making it cheaper to buy.
This is due to the expected negative impact on emerging markets from a higher interest rate in the US. As South Africa, like most developing nations, borrow money in the US Dollar because of its stability the repayments of these loans would increase.
GBP/ZAR rates currently sit close to 17.75 and if the FED was to suggest more hikes 18 could be on the horizon. However if Janet Yellen gives the opposite view watch out as 17.50 could be seen quite quickly.
For more information on how future economic and political events could affect your currency requirement, call our trading floor on 01494 725 353.