Currency - GBP / South African Rand

Concerns over the pace of the global recovery are weighing on the South African Rand. This nervous reaction is understandable as investors sweep their funds into safe havens; in spite of all of the positive’s the South Africa Rand is still seen in the markets as an ‘exotic’ which is code for slightly risky and far less liquid than the ‘majors’. As a consequence, when investors are seeking safety, the lure of high interest rates in South Africa is offset by the certainty that comes from US or Japanese government debt. In essence the Rand should be far weaker than it is but it is at its strongest level against the Pound since mid June. The reason for that must have something to do with the value of South Africa’s exports which include gold, silver and diamonds. These too are seen as safe haven assets due to their intrinsic value and they are priced and traded in US Dollars which, as we can see is very strong at the moment. In the very short term however, R11.30 is a very good support level and R 11.60 is solid resistance. A break of either end of this narrow range would be highly significant but in the meantime, using this trading range as your guide is a very good plan.