The British pound sterling to rand (GBP/ZAR) exchange rate saw a fresh rally this week on further political uncertainty
Although the South African Rand exchange rate strengthened in the early stages on Thursday, gains were short-lived amid ongoing concerns regarding President Zuma’s ability to rule successfully.
The Federal Reserve rate hike has added more downwards pressure on commodity prices and South Africa’s mining industry is already under threat from a recent announcement by Anglo American that it would be shedding more than half of its global workforce.
In response to the massive job losses in South Africa’s mining sector, Chief Executive Mark Cutifani recently commented that South Africa “still remains our highest returning jurisdiction across the globe. We will continue to manage those challenges going forward, but it will be a relatively lower footprint.”
With the slow pace of British wage growth continuing to weigh on demand for the British asset, the Pound failed to capitalise on better-than-expected retail sales growth
The Federal Reserve interest rate decision resulted in the first cash rate hike in nine years but the news failed to have a dramatic impact on currency markets.
The GBP/JPY exchange rate edged fractionally lower as traders speculate that the Bank of Japan will get through 2015 without boosting stimulus.
Although geopolitical tensions in Turkey are far from abating, the Lira (TRY) is holding steady versus the Pound as NATO step in to control Turkish airspace.
Meanwhile the South African Rand (ZAR) strengthened versus the Pound despite ongoing South African political uncertainty as traders readjust positions to a more appropriate Rand trade weight.
Here's the live forex rates for reference purposes:
On Saturday the Japanese Yen to British Pound exchange rate (JPY/GBP) converts at 0.005
The GBP to JPY exchange rate converts at 192.066 today.
At time of writing the pound to south african rand exchange rate is quoted at 23.225.
At time of writing the pound to turkish lira exchange rate is quoted at 40.597.
The pound conversion rate (against australian dollar) is quoted at 1.9 AUD/GBP.
Please note: the FX rates above, updated 4th May 2024, will have a commission applied by your typical high street bank. Currency brokers specialise in these type of foreign currency transactions and can save you up to 5% on international payments compared to the banks.
Although November’s British Retail Sales data produced better-than-expected results, the Pound is generally holding a weak position versus its major peers. This is mostly due to speculation that the Bank of England (BoE) will look to delay a cash rate increase well into 2017 having highlighted the slow pace of wage growth as a significant stumbling block to tighter policy. Members from the Monetary Policy Committee (MPC) also recently stated that they will not feel pressured into tightening policy just because the Federal Reserve has begun a tightening cycle.
In response to the better-than-forecast domestic data, which saw retail sales advance by 5.0% on the year in November, Melanie Richard, an ONS statistician, said in a statement:
“A continued fall in prices as well as promotions in the run up to Christmas have helped to boost the amount shoppers bought in November, both on the High Street and online.”
Meanwhile the Japanese Yen is making gains versus many of its currency rivals thanks to speculation that the Bank of Japan (BOJ) will end the year having not boosted monetary policy stimulus. Although Japanese inflation remains low, thanks to the sustained period of low oil prices, BOJ Governor Haruhiko Kuroda recently stated that he is in no hurry to stimulate price pressure with ages remaining low.
Kuroda has signalled he wants inflation to rise in a balanced way, “indicating that he is in no hurry to push up inflation if wages are not catching up. This differs from his previous stance,” stated Betty Wang, an economist at Standard Chartered Plc.
South African Rand Exchange Rate (ZAR) Slowly Recovers despite Ongoing Political Uncertainty
Despite the fact that South African citizens continue to voice concerns regarding President Jacob Zuma’s ability to govern, and irrespective of similar uncertainties weighing on investor confidence, the South African Rand strengthened versus many of its rivals on Thursday. Even disappointing producer prices data wasn’t enough to deter the Rand’s advance.
The Federal Reserve’s assertion that monetary policy tightening will be a long and gradual process is partly responsible for the Rand’s appreciation. Additional gains can be linked to speculation that the Rand is critically undervalued which has caused traders to adjust positions to a more appropriate trade weight.
Many analysts fear that the Rand will not full recover for a considerable time despite signs of underlying strength in the South African economy. “In essence, South Africa’s economy is fairly strong. If you dig deep down, things are more or less in place,” Rosenberg, of Frontier Strategy Group, said. “But there are so many problems around it right now. I don’t think it’s going to come out of it any time soon.”
Turkish Lira Exchange Rate Edges Higher despite Ongoing Geopolitical Tensions
Since Turkey downed a Russian airplane on the borders of Syria geopolitical tensions between Russia and Turkey heave reached boiling point. Many fear that any further escalation will cause a full-scale war. With these concerns in mind NATO has taken control of Turkish airspace in the hopes of preventing retaliation from Russia and avoiding another crisis.
"NATO will increasingly take over management of Turkish airspace, so the Turks will have to be mindful of the fact that we will have eyes in the sky that can give a second opinion on any situation," a NATO source said.
The involvement of NATO has eased some investor concerns and caused the Lira to edge higher versus many of its peers, including the Pound Sterling.
BOJ Interest Rate Decision Predicted to Support Yen as Traders
With an absence of domestic data pertaining to the UK, Turkey and South Africa there is the potential that the GBP to TRY and ZAR exchange rates will see reduced volatility.
The Yen, however, could see significant volatility in response to the Bank of Japan’s (BOJ) interest rate decision. Many traders believe that the BOJ will avoid boosting stimulus as slow wage growth eases the impact of low inflation.
“It’s not time yet for the BOJ to step up,” said Masamichi Adachi, an economist at JPMorgan Chase & Co. and a former central bank official. “Japan’s recovery is gathering speed gradually and they can defend falling prices and weak inflation expectations by attributing to the plunge in oil for now.”
Japanese Yen Climbs amid Hopes BOJ Stimulus Will Boost Inflation
Although most economists expected the Bank of Japan (BOJ) to keep the current stimulus package unchanged, the central bank surprised markets by extending the duration of bond purchases.
This caused the Yen to initially decline, but the Japanese asset quickly recovered amid hopes that this boost to stimulus will be enough to push inflation higher without the need to extend the QQE program.
"We've taken steps to supplement QQE so that we can expand the programme without hesitation if needed," BOJ Governor Haruhiko Kuroda told a news conference after the decision. "Companies and households are shifting away from a deflationary mind-set," he said. "But there are discrepancies among sectors, so we want to broaden the positive momentum. We wanted to do whatever we can to support this drive."