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continued its downward streak on Monday and Tuesday as it followed other emerging
market (EM) currencies lower. Tensions between the US and Turkey weighed down
EM currencies, as Donald Trump threatened economic sanctions.
The Rand’s downward trend continued on Wednesday when Eskom implemented stage 2 load shedding due to complications with several power stations. Wednesday also saw the release of weaker than expected retail sales, which also caused some short-term weakness in the ZAR.
On Tuesday, the
Rand broke the R19 to the Pound barrier and continued to lose ground on
Wednesday, reaching a low of R19.27 for the first time since June. The draft
Brexit deal between the EU and the UK drove the Pound significantly higher
against most currencies, including the Rand.
By the end of
the week, the Rand reversed some of the previous few days’ losses. It opened at
R19.05 to the Pound and peaked at R18.96 before closing at around R19.07 on
On Friday, the
Rand traded between R18.96 and R19.01 to the Pound. It remained directionless when
US-China trade talks stalled, and the draft Brexit deal failed to receive
approval from opposition parties in the UK.
Looking at the
week ahead, traders will mainly focus on the South African inflation rate on
Wednesday, and further developments in the Brexit draft deal.
Market Event Calendar
Wednesday 23 October
- The South African inflation rate:
Expected to be within the target range and be ZAR positive.
Thursday 24 October
- European Central Bank interest
rate decision: Expected to remain at zero, a decrease into negative territory
will be EUR negative.