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Rand Firm Despite Strike Season

Local markets have been largely hit by the current wave of strikes in South Africa, 200 000 municipal workers are now demanding a 18% or R2000 salary increase, whichever is higher.

With regards to the impact the strikes have on investors, Warrick Butler, a trader at Standard bank said:
“People don’t look at that as the cause to disinvest or invest; they look at the overall picture. At the moment the country — despite the small woes that we have — has a lot rosier picture than a lot of the developed markets,”
Solutions for the Euro debt crisis are looking bleak.

French and German leaders, Merkel and Sarkozy, did not impress investors with their attempt to calm Euro debt concerns, thus causing the Euro markets to plunge. The chief executive of ADVFN, Clem Chambers, said: “The market gave Merkel and Sarkozy their chance to stop the Euro crisis,” he said, “Today it is responding to their inaction.”

Leaders in Europe are under severe pressure to make a decision revolving the debt crisis in Europe. Carl Weinberg, one of High Frequency Economics economist’s said: “There is no solution to the Euroland’s sovereign debt crisis in sight,” he said “Markets will continue to be fundamentally unstable and volatile as long as we can think.”

Investors demand for the Rand remained strong this week. R3, 3 billion rand’s worth of investment was sold on Thursday.

According to Reuters Africa a bond trader in Johannesburg said, “Our debt matrices are obviously better than some of the European countries and the other emerging market countries. Our yields are about 570 points over the U.S. treasuries curve and that is also providing investors with a good return,”

ZAR/JPY: 10.580
USD/ZAR: 7.1790
GBP/ZAR: 11.823
EUR/ZAR: 10.308

Exchange rates as of 06:44, 22 August 2011

Composed by Inge Grobbelaar

Aussie Strength Affects Steel Industry

The Australian dollar strengthened by more than half a cent to the Dollar, after the sentiment of the market started looking very positive for a change.

Tim Waterer, CMC Markets foreign dealer said that it was a fairly positive start for the Australian dollar, with equity markets in Asia showing some reliance, and not following the negative lead from Wall Street on Friday.

“There is a situation in the market at the moment that perhaps the recent sell-off is not justified by the fundamentals. That would bring some of the bargain hunters into play.’’

The Aussie also advanced against the yen, despite speculation that the Federal Reserve Bank is considering further steps to improve the US economy, supporting demand for riskier assets.

BlueScope Steel, one of Australia’s largest steelmakers has shut down half of its steel-making capacity, ceased exports, and scrapped as many as 1000 jobs. This, along with the high Australian dollar, has put a lot of pressure on trade-exposed industries.

The announcement by BlueScope came one week after OneSteel, one of its competitors announced that 400 job positions were to be axed, with more to follow in coming weeks. Both steel makers are blaming the strong dollar, as well as weak demand for the cuts. HSBC’s chief economist, Paul Bloxham said that this is the nature of structural shift that is happening in the Australian economy at the moment.  

‘‘The high level of commodity prices is boosting the exchange rate lately meaning we are getting the structural shift. With commodity prices at the high levels they are, it motivates labor and capital to shift towards the mining industry.’’

GBP/AUD: 1.5804
AUD/EUR: 1.3807
AUD/USD: 1.0429
AUD/JPY: 80.01

Exchange Rates as of 09:58, 22 August 2011

Composed by Francois de Wet

Kiwi Stirred as Jackson Hole Approaches

The Kiwi began trading last week Monday the 15th August 2011 around the 1.958 mark to the British Pound and 1.203 to the US Dollar. The Kiwi closed slightly weaker on Friday the 19th August 2011 at 2.011 to the British Pound and 1.194 to the US Dollar.

The New Zealand Dollar is looking shaky ahead of the Jackson Hole summit. Fears are rising in anticipation of any unexpected news being released this week by the Fed Chairperson, Mr. Ben Bernanke, as he goes into the Jackson Hole summit to deliver his speech on the current state of affairs in the market.

This can be seen by investors’ flight from riskier currencies such as the New Zealand and Aussie Dollars to stronger, more stable commodities such as gold.The global equity market seems to be gearing up for another volatile week ahead. Markets are looking ahead to the Jackson Hole summit where the worlds top Economists and policy makers will come together to discuss possible future issues and emerging trends within the global markets.

Investors are expecting the Fed to use this opportunity to evaluate every policy tool at hand that could be used to help the US recover from the recent market events.The week ahead could be an eventful one as investors continue to fly to quality and get short on currencies that are considered “risky”.

Economists say that the lack of liquidity in the Kiwi market will only make matters worse as the public start selling off their New Zealand Dollars.

NZD / GBP: 2.013
NZD / EUR: 1.749
NZD / USD: 1.194
JPY / NZD: 63.07

Exchange rates as of 09:30, 22nd August 2011

Composed by Paul Gerber

:: Note: The above exchange rates are based on “interbank” rates. If you want to transfer money to South Africa then please register/login or call us for a live dealing rate.

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