The South African rand lost ground yesterday after a much-needed 7 days of strength. After touching 6-week highs against sterling, comments made by South African Finance Minister Pravin Gordhan yesterday triggered a sell-off from midday. Gordhan lowered the growth outlook for Africa’s largest economy, explaining that growth is unlikely to rise over the next three years. The growth forecast was cut from 3% to 2.7%, which, coming off the back of an unexpected interest rate hike last month, has left the outlook for the rand uncertain.
Political uncertainty in Russia was the catalyst for the rouble weakening throughout the day yesterday. Russian President Vladimir Putin was reported to have ordered military exercises amid increasing tension in Ukraine, particularly in the Crimea region. The news, combined with a general weakness in the rouble, caused the currency to extend to record lows yesterday, with no sign of the slide abating.
Elsewhere, markets were relatively flat yesterday, with currencies such as the Canadian, Australian and New Zealand dollars all trading in a fairly narrow range against sterling. The Japanese yen showed a bit of strength later on in the day.
Overnight last night we had trade balance figures out of New Zealand, and investors will be assessing their effect on the New Zealand dollar today.
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