South African Rand best performing currency

South African Rand best performing currency

11-07-2009 14:22

The South African Rand posted the best results of the 16 most popular currencies in the Forex market, on the back of increasing demand worldwide for metallic commodities exported from South Africa, which led to higher prices and boosted the rate and popularity of the Rand.

Dominating risk seeking

Gold and platinum are the main South African metal exports, which increased considerably this week, due to risk seeking dominating this week’s trading session, stimulating the Rand to post the best results among the most traded currencies, and resulting in the strongest week by week rally in 12 weeks.

Neutral point of view

The decrease in foreign currency reserves growth also had a positive influence on the Rand, which may implicate that the central bank decision-makers’ point of view with relation to the present strong rates of the South African Rand is neutral. Indeed, the results by the Rand are one of the top 5 best results this year, together with currencies that have a comparable profile regarding strong interest levels and an export-based economy, such as the Brazilian Real and the Aussie.

Support for a rally

Currency analysts confirm that the South African central bank’s point of view regarding the high rate of the Rand stimulates its currency to rally. On the other hand, a strong currency is not desirable in countries such as Canada, which has a negative impact on the Loonie, while the South African Rand still is expected to rally further.