South African Rand (ZAR) Claws Back Losses despite Investor Fears over SARB Nationalisation
The Pound South African Rand (GBP/ZAR) exchange rate slipped this morning, and is currently trading at an inter-bank rate of R18.9651.
Thursday saw the Rand weaken as the South African Reserve Bank (SARB) stared nationalisation in the face, as the ruling party was said to be pressing ahead with taking control of the central bank.
The President of South Africa, Cyril Ramaphosa, complained about the current power dynamic within the SARB, saying that ‘external shareholders’ (taken to mean foreigners) had too ‘much control’ over the operations of the bank, saying that a move towards nationalisation would be a progressive one.
Ramaphosa said:
‘You must never think the ANC [African National Congress] is smoking something. This has been done by a number of countries in the world. There are only six countries in the world that still have external shareholding in their central banks – South Africa is one of them.’
However, economists are not confident about the move, with the Rand slipping on investor fears.
Commenting on this, Peregrine Treasury Solutions Analyst, Bianca Botes said:
‘While the current shareholders of the SARB have no influence on the mandate of the SARB, one cannot help but wonder whether this will remain the case once the one and only shareholder becomes a governing body that admittedly struggles to eradicate corruption in itself.’
Pound South African Rand (GBP/ZAR) Exchange Rate Slides as PM Makes Last-Ditch Effort for Better Brexit Deal
Brexit anxieties have played on the Pound, as reports emerged suggesting Theresa May was making a last-ditch attempt at discussions with the European Union.
The Prime Minister is said to be attempting to persuade the EU to grant her a better deal in terms of the Irish backstop, despite it being ‘clear’ talks in Brussels had stalled.
Yesterday: Pound to South African Rand (GBP/ZAR) Rises despite Dovish BoE
The Pound (GBP) has slipped this morning after rising against the South African Rand (ZAR) during the session yesterday.
This comes despite reports that said both British and EU sources had stated Brexit negotiations had hit an impasse.
The Bank of England’s (BoE) Silvana Tenreyro gave a speech in which she suggested the bank was more likely to cut interest rates that raise them.
In the case of a disorderly, no-deal Brexit, Tenreyro suggested the bank was more likely to cut rates, stating:
‘In my judgement, a situation where the negative demand effects outweigh those other effects is more likely, which would necessitate a loosening policy. But it is easy to envisage other plausible scenarios requiring the opposite response.’
Pound South African Rand Outlook: Will the GBP/ZAR Exchange Rate Slide on Next Week’s Brexit Showdown?
There are a lack of economic data releases for the rest of this week’s session, meaning it is likely that Brexit will remain the main catalyst for movement in the GBP/ZAR pairing.
As the second ‘meaningful vote’ draws closer, the Pound could slip against the South African Rand (ZAR) if there are signs that Parliament will reject the Prime Minister’s deal.
Sterling could fall on Monday following a speech from the Bank of England’s (BoE) Jonathan Haskel if he adopts the same dovish tone that Tenreyro had this week – with his comments likely to cause the Pound South African Rand (GBP/ZAR) exchange rate to fall.