Foreign Exchange - UK Daily Update - Tuesday, November 4, 2008 11:06 - 0 Comments

Rand Retraces Recent Weakness as SARB Hold Review – World First’s Rand Update – 4th October 2008

The Rand retraced some of its recent weakness against Dollar and Sterling as risk aversion ebbed back into the markets. We predict a stabilising of Rand for the short term; however it will continue to be influenced in its major crosses by external factors such as the American election result.  An expected Obama win may prove to be favourable for the Rand, as would further deterioration in this week’s US manufacturing and unemployment figures.

 In other political news over the weekend, we saw confirmation of a new political party formed to contest the next general elections in 2009. The ANC is still considered favourite to retain power, but the newly formed contender lead by Mosiuoa Lekota and Mbhasima Shilowa may yet prove worthy adversaries.

The SARB holds is semi annual monetary policy review today in Pretoria. The review is expected to highlight recent Rand weakness and the continued focus on inflation. Meanwhile data on the inflation front flowed throughout last week, with CPIX Inflation figures moderating to 13.0% in September from 13.6% in August, and headline inflation also falling from 13.7% to 13.1%. Adding to the favourable news was a PPI figure of 16% year on year, from a September reading of 19.1%. Recent weakness in the Rand may add some short term pressures to this but overall the medium term inflation outlook looks promising.

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Disclaimer: The above comments are only our views and should not be construed as advice. You should act using your own information and judgement. Although information has been obtained from and is based upon multiple sources the author believes to be reliable, we do not guarantee its accuracy and it may be incomplete or condensed. All opinions and estimates constitute the author’s own judgement as of the date of the briefing and are subject to change without notice.

Any rates given are “interbank” i.e. for amounts of £5million and thus are not indicative of rates offered by World First for smaller amounts. E&OE. Definitions of jargon/market terms can be found in our Glossary of Foreign Exchange Terms.