The Rand advanced against rivals Wednesday as traders responded to official data revealing a surprise fall in inflation during August and as a declining U.S. Dollar offered a rare moment of respite to the South African currency, but few analysts expect these gains to endure.
The Rand is on course for fresh losses this week because the South African Reserve Bank (SARB) is unlikely to deliver what markets are looking for following Thursday's interest rate meeting, according to strategists at Morgan Stanley, who are advocating that clients sell the currency and buy the U.S. Dollar.
The Rand's 2018 losses have reached problematic extremes and a rate hike from the South African Reserve Bank (SARB) is now necessary to stabilise the currency and combat rising levels of inflation, according to Investec Bank.
The Pound-to-South-African-Rand rate fell for the third consecutive session at the start of the new week after following reports alleging that officials are sacrificing much needed detail in order to get a quick fix in the Brexit negotiations, but the bigger picture supports a bullish outlook for GBP/ZAR.
Key 20.00 market for GBP/ZAR now breached as SA slides into recession and the Rand is swept away with other Emerging Market currencies as investors liquidate holdings in favour of Dollars. But, the ZAR is considered undervalued by Standard Bank, and this hints that a recovery lies ahead.