The rand gains most in six months

Trade report 03/04/2013

In current market conditions we can expect the trade account, which reached record highs earlier in the year, to gradually decrease, thanks to strong portfolio inflows supporting the ZAR. The ZAR is showing signs of retesting levels of 8.9500 this morning and technically all indications support that levels will be reached. 

The rand gained the most in six months yesterday as a rally in precious-metal prices heightened South Africa’s exports. The gold price strengthened easing the worst losses since December 2011, platinum prices also rose for a fourth day.

The US Federal Reserve is only making modest progress in reducing unemployment numbers. For the last three years the American adult employment rate has been at 58.5, approximately five percentage points below its prerecession peak. 

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Rand shows no clear signs of directional momentum

Trade report 29/04/2013

Gold and Platinum prices are both presenting a marginally firmer bias and aren’t showing reason as to why the ZAR should weaken significantly during the course of the week. The USD-ZAR is expected to trade at 9.05-9.1500 today.

The Department of Energy’s Central Energy Fund announced on Friday that the retail price of petrol will go down with 73c/l and sulphur diesel will go down with 56c/l from Wednesday May 1. The lower basic fuel price for petrol, diesel and illuminating paraffin has been help by a better Rand Dollar exchange rate. 

By the end of 2012 the Netherlands and Luxembourg had booked foreign direct investment (FDI) of $5.8tn. This is more than the UK, US and Germany combined and is sure to fuel controversy over aggressive corporate tax policies. 

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What is a Nostro account

A Nostro account is a bank account held in a foreign country by a domestic bank, denominated in the currency of that country. Thus a Nostro account is your account in a different country. A Nostro account is always in foreign currency.

For example, if you live in the South Africa and ask your local bank to set up a American account for you, they will most likely open a "Nostro Account" with a correspondent agent bank in the United States that they have a banking relationship with for that specific purpose. The US bank will set up the account, but it is not a typical checking account.

These accounts are treated differently on the books of the bank. Transactions to and from these accounts may only be wire transfers, using SWIFT, to ensure identity credentials are monitored and that special handling is used. Generally, companies will use these types of accounts when they often either buy or sell in another country but do not have a physical presence that would afford them usage of a typical checking account arrangement.

Strong perforemance by commodity currencies

Trade report 24/04/2013

Commodity prices may receive renewed support ahead of next week’s ECB decision. The stronger performance of commodity prices has strengthened commodity currencies like CAD and AUD, who are recovering from recent lows. One suspects the ZAR will receive similar support just as it did yesterday.

For a second consecutive day the rand gained as metal prices rallied on reports that banks will do more to encourage growth. Gold and platinum prices increased, but orders for durable goods in the US fell the most in seven months and German business confidence slipped for a second month.

One day before the UK growth statistics are to be released, Chancellor George Osborne has become anxious to reveal measures to increase economic growth. On Wednesday he announced revised plans for the Funding and Lending scheme, but UK experts on credit supply were not impressed. Economists and BOE insiders welcomed the scheme, but believe it will only have marginal effect.

To read the full report, visit the Currency Solutions website. Transferring funds out of South Africa/Money transfers into South Africa – Let one of our professional consultants at Currency Solutions assist you. To know more about how we can help you Contact Us.

Gold price offers some encouragement to the ZAR

Trade report 24/04/2013

A lack of Foreign Direct Investment (FDI) into South Africa and low productivity in SA are some of the reasons given as to why small business do not flourish as they should. In terms of the rand the recovering gold price offers some encouragement to the ZAR. The USD-ZAR is expected to trade at 9.15-9.2500 today.

Debate broke out on Tuesday about whether reports of South African companies holding more than R550bn in cash rather than investing it in the economy are true. Data from the Reserve Bank show that deposits by the nonfinancial corporate sector were R561bn at the end of February.

On Wednesday the Bank of England announced that its Funding for Lending Scheme will be extended for a year with the focus on helping small and medium-sized businesses. The tweaked scheme wants banks to lend more to SMEs by offering them lower funding than they can achieve in financial markets.

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Commodity currencies affected by weak Chinese manufacturing data

The USD-ZAR is expected to trade at 9.20-9.3300 today. Disappointing PMI data in China have placed commodity currencies like he AUD, CAD and ZAR on the defensive. Yesterday’s ZAR weakness followed by a slight recovery suggested that a move toward 9.3000 was not sustainable.

On Monday Transport Omnibus Workers’ Union (Towu) announced that bus drivers for luxury liners will be joining the nationwide bus driver’s strike on Wednesday. Springbok Atlas Luxury charters and the Unitrans Group (GreyHound Pty Ltd, Megic Bus, Mega Coach, and Citi Liner) will be joining he strike. 

European Commision president José Manuel Barroso said on Monday that he believes Europe may have reached the political limits of how far it can go with austerity-led economic policies. In recent weeks it has become clear that there is growing opposition from Eurozone leaders in regards to austerity measures. 

To read the full report, visit the Currency Solutions website. Transferring funds out of South Africa/Money transfers into South Africa – Let one of our professional consultants at Currency Solutions assist you. To know more about how we can help you Contact Us.

Labour strikes cause Rand weakness

Trade report 22/04/2013

Early on Monday the rand weakened within a recent range against the dollar, with bonds also turning weaker after more outbreaks of labour strikes in the mining and transport sectors. The USD-ZAR was down to 9.3053 at 10:28, off a 9.2220 close in New York on Friday. 

The SA Commercial, Catering and Allied Workers' Union (Saccawu) members of the National Bargaining Council for the Road Freight and Logistics Industry have planned there strike to start on Monday. “Workers, after a lengthy negotiation and legal processes, reached a deadlock with the employer,” said spokesman Mike Abrahams in a statement.

The World Bank and International Monetary Fund ended (IMF) their annual spring meetings with a strong message for Europe: Do more. Many European leaders seem to agree with this message and are talking about lowering the pace of budget cuts to encourage European growth. 

To read the full report, visit the Currency Solutions website. Transferring funds out of South Africa/Money transfers into South Africa – Let one of our professional consultants at Currency Solutions assist you. To know more about how we can help you Contact Us.

ZAR consolidating its positions

Trade report 19/04/2013

It looks like the week will be ending off relatively quietly with the ZAR consolidating its positions for the most part. The USD-ZAR is expected to trade at 9.13-9.2300 today. 

The new National Planning Commission (NPC) has come to the conclusion that nuclear power in South Africa should be delayed by years, and focus should shift to the contracting of new gas-generation capacity to avoid rolling blackouts in the near future. 

It seems the risky amalgams of loans and mortgages, created by American banks, are back once again. Financial products like collateralized debt obligations, the same financial products that went south during the recession, are being sold on Wall Street. 

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S.W.I.F.T. made easy

The Society for the Worldwide Interbank Financial Telecommunication (SWIFT) was founded in Brussels in 1973. SWIFT was started by European bankers who had the need for a more secure system for interbank communications and transfer of funds and securities. Before the Society was established interbank communications were by telephone, telex, courier, or mail. Today more than 7,000 financial establishments across 194 countries worldwide make use of S.W.I.F.T. messaging and transaction processing services.

The EFT for International Banking

A SWIFT consists of a one-page document containing the name and code of the originating bank, the date and time, the address and code of the receiving bank, the name and internal code of the officer initiating the transmission, the names and numbers of the accounts involved in the transfer, a description of the asset being transferred and the MT category of the transmission.

SWIFT Message

SWIFT messages are pre-set and referred to by category numbers called MT numbers. For instance, MT800's only deal with Traveler's Checks, MT300's only deal with Foreign Currency Exchanges.

Each MT category has its own manual of standards. What this means is that one cannot write SWIFT instructions that do not work with the pre-set messages and expect the sending bank to accept them, or the receiving bank to respond.

Better than expected retail sales

Trade report 18/04/2013

The retail sales data released yesterday is good news for many. Data revealed that retail sales figures were up and inflation down, thus inflation ought to remain below the 6% mark for the next few months. The USD-ZAR is expected to trade at 9.15-9.2500.

Figures released on Wednesday showed better than expected retail sales. The figures suggest that the anticipated slowdown in consumer spending may not be as severe as was expected. Retail sales are an important contributor to consumer spending patterns. The sector contributes roughly 14% to the total value added to domestic growth. 

The long term effects of interest rates close to zero have become a growing concern at the International Monetary Fund (IMF) as some of central banking’s leaders confessed that they are in uncharted water in managing their economies. 

To read the full report, visit the Currency Solutions website. Transferring funds out of South Africa/Money transfers into South Africa – Let one of our professional consultants at Currency Solutions assist you. To know more about how we can help you Contact Us.

Tough road ahead

Trade report 17/04/2013

The Gold and PGM (Perth Mint Gold) prices are currently too low for SA. If these prices are to be sustained, SA mines have a very tough road ahead. The current risk for the rand rests in favour of further weakness in the months ahead rather than a recovery. USD-ZAR range for the day: 9.10 – 9.2000.

For the first time in three days the rand gained, recovering from the biggest one-day drop in six months. The rand strengthened somewhat and traded at 9.1620 per dollar by 4h15 yesterday, 0.5 percent stronger than on Monday.

Policy makers in the United States and Europe often use austerity budgets that increase unemployment and curb economic strength, to avoid reaching high debt that they believe could threaten economic health. But some economists are now questioning whether such a debt threshold even exists.

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ZAR pull's back slighly

With tragic news of the Boston Marathon bombings and the possibility of more terrorist attacks in the US, markets are waiting on further details to better understand the implications of this event. Investors will try to piece together the implications of the Boston Marathon bombings with the expected USD-ZAR range for today at 9.10-9.2500. 

According to a manufacturing survey by the Bureau of Economic Research (BER) released on Monday, business confidence in the SA manufacturing industry gained four index points in the first quarter of the year to 42.

Gold prices have plummeted in recent days with the spot price of gold decreasing with more than $100 an ounce, an 8.7% drop in price, while the price of silver fell 11%.

To read the full report visit the Currency Solutions website. Transferring funds out of South Africa/Money transfers into South Africa – Let one of our professional consultants at Currency Solutions assist you. To know more about how we can help you Contact Us.

ZAR explosed to weakness

Trade report 15/04/2013

Many emerging market currencies are feeling pressure this morning as a general rotation toward safe haven currencies unfolds. The USD-ZAR level has already reached 9.0000with even greater gains to be expected. In the coming trading sessions targets back up to 9.2000 seem realistic. The USD-ZAR is expected to trade between 8.98-9.1000 today.

Retail sales and consumer price index (CPI) data from Statistics SA is likely to be released later this week. Analysts are not expecting positive results with consumers under pressure and interest rate cuts not expected in the near future.

Central banks like the Federal Reserve and the Bank of Japan (BOJ) are encouraging investors to put money into stocks and other high risk investments, increasing their prices meaning good news for big American companies.

To read the full report visit the Currency Solutions website. Transferring funds out of South Africa/Money transfers into South Africa – Let one of our professional consultants at Currency Solutions assist you. To know more about how we can help you Contact Us.