Sterling’s luck seemed to run out as Tuesday’s European session continued, with the Pound falling against a host of other majors, including the South African Rand (GBP/ZAR). The British currency still managed to maintain some gains against the Swiss Franc (GBP/CHF).
The emerging market Rand has come under pressure of late, conceding ground to currencies such as the Pound. Tensions between the US and Syria haven’t helped currencies that carry higher risks, and so investor sentiment has been muted amid global developments.
South African President Ramaphosa Boosts Rand with Investment Bid
However, the tide turned in the afternoon of Tuesday’s trading after UK wage data failed to reach forecasts. New South African President Cyril Ramaphosa did his bit to boost the Rand too, pioneering a mission to attract $100 billion in fresh investments to the nation. Ramaphosa promised to open the labour market with more job creation and address some of the missteps by former President Jacob Zuma.
Before he headed to London on Monday night, the President announced that there would be a major investment conference taking place by the close of September which would hopefully attract big investments in coming years.
The President’s office said:
‘President Ramaphosa will utilise the opportunity to engage with major investors and business leaders based in the United Kingdom. The President will thus extend an invitation to leading investors and leaders of business to attend the Investment Summit scheduled for later this year.’
Investors in the GBP/ZAR exchange rate will be looking towards Wednesday’s data with inflation readings due out from both the UK and South Africa. The UK inflation rate is expected to remain at 2.7% on the year in March. The South African inflation rate is forecast to climb from 4.0% to 4.1% March, while the core reading is predicted to increase from 4.1% to 4.3%.
Swiss Franc Approaches 1.20 Level – Will the SNB Begin to Normalise?
This week, the Swiss Producer and Import Prices number contracted by -0.2% in March. The previous reading came in at 0.3%, and the consensus was March would increase to 0.4%. The annual figure fell from 2.3% to 2.0%, instead of rising to 2.6% as economists had thought. The fall lower has been attributed to lower prices for petrol and pharmaceutical preparations.
The Franc dropped to a three-year low against the Euro on Tuesday at 1.19, almost within touching distance of the 1.20 level the Swiss National Bank (SNB) had set as the minimum exchange rate back in 2015. The central bank has been jawboning the currency lower for some time, attempting to bring it down, and markets are now wondering if the central bank may look to normalise it’s monetary policy soon, and do away with the negative interest rates that have been in place for some time.
Economist Nadia Gharbi commented:
‘We’re getting close to the famous limit, so it’s a relief for the SNB to have the Franc where it is, but they’ll want to see a consolidation of the trend before doing anything. From the communication side we might see a slight shift, but the SNB will remain very prudent. There’s the risk of a trade war and the situation in Italy remains fragile.’
Despite the decline, the SNB still believes the Swiss Franc is a safe-haven asset.