The South African rand strengthened today versus the euro and the U.S. dollar after the retail sales grew as the central bank has performed the interest rates cuts, leading to the accelerated economic expansion and the stronger currency.
The Reserve Bank has cut the benchmark rate by 5.5 percentage points since December 2008 to 6.5 percent. The retail sales grew in March 1 percent from a year ago, the first increase in more than a year. Gross domestic product rose with the fastest pace in more then a year from 3.2 percent in the fourth quarter to the annualized 4.3 percent in the first quarter.
Such favorable readings caused Pravin Gordhan, the Minister of Finance, and the International Monetary Fund to announce that they may raise their forecast for the nation’s economic growth. The economists think that such optimism may be premature as the influence of the EU fiscal crisis may influence the economic expansion.
USD/ZAR traded today at 7.812 as of 16:24 GMT after opening at 7.854. EUR/ZAR fell to about 9.6938 from the opening rate of 9.8484.
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