July 2013: The Rand was extremely volatile in June, at one stage reaching its lowest value since March 2009, says the latest Nedbank Monthly Insights report.
The Rand’s value stabilised slightly later in the month as market values corrected themselves slightly, but the currency is likely to remain vulnerable in coming months, due to factors including the start of wage negotiations in the mining industry, subdued commodity prices and disappointing domestic growth. However, there is good news, too.
The US Federal Reserve recently published its June minutes, stating that it would keep interest rates as low as possible to attract investment. Lower interest rates in the US are good for the markets and the Rand's value increased overnight from R10.30, to R9.90 to the Dollar.
Another factor helping stabilise the value of the Rand is that the South African Reserve Bank chose to keep interest rates unchanged, rather than lowering them. This would have spurred on growth and investment, but would have badly affected the Rand’s value.
In the days after US Federal Reserve announcement, the Rand continued to be valued at under R10 to the Dollar.
“This is good news, signalling more stability for emerging economies,” says Bertus. “It is especially welcome news to industries like ours, which use raw materials in their manufacturing processes.
“We will continue to keep our clients informed about the economic forces that affect our clients’ businesses. Our aim is to provide insights that can help us all make strategic decisions for the future, based on the best available knowledge.”