South African Rand Weakness – What is happening?

GBP EUR Exchange Rate: Weekly Review July 16  

The South African Rand has weakened considerably over the past few weeks and most notably in the last couple of days.

It appears the Rand is being hit from a few angles, investors are rushing to dump off riskier assets, which would be inclusive of notoriously volatile and risky South African Rand, it appears growth forecasts for South Africa may well be downgraded today and also we are seeing a minimal unwinding of carry trades as global uncertainty sticks its head above the wall once again.

Carry trading is where an investor borrows money from a currency with a very low interest rate (JPY,GBP,USD) and invests in one with a higher one (AUD,NZD,ZAR) making their return on the difference. As soon as the currencies with the higher rate start to weaken the difference can be lost so yuou see a huge unwinding of trades which canweaken them even further, leading to a snowball effect.

Should you have a South African Rand transfer to carry out, please contact me directly [email protected] and I will explain the various options available to you and how I can help. The ZAR has lost 22% against the Pound so far this year!