USD/ZAR: Rand heads for biggest weekly loss since April 2022

Key points

The South African Rand was mostly steady against the US Dollar on Friday. However, the exotic currency was heading for its largest weekly decline since April 2022 amid a broad risk aversion stemming from the US credit rating downgrade.

The Rand has lost more than 6% so far this week, after ratings agency Fitch cut the United States’ top credit rating to AA+, which triggered a move into safe haven assets and mounted pressure on emerging market currencies.

Investors will now be paying attention to the US Non-Farm Payrolls report due out later today. Employers in all sectors of the US economy, excluding farming industry, probably added 200,000 job positions in July, according to market consensus, following a job growth of 209,000 in June.

Meanwhile, lower intensity in rolling blackouts in June had provided certain support to the Rand.

Yet, the power cuts, also known as “loadshedding”, proved to be more intensive in July.

“We believe there is a substantial element of ‘noise’ and ‘luck’ in month-on-month performance, with July’s intensity of loadshedding reversing closer to trends,” Anezka Christovova, an emerging markets strategist at JPMorgan, was quoted as saying by Reuters.

“Our economist expects a more sustained improvement in energy availability only in H2 2024.”

No relevant macro data will be released out of South Africa on Friday.

As of 9:20 GMT on Friday USD/ZAR was edging down 0.12% to trade at 18.6764. Yesterday the exotic Forex pair went up as high as 18.7769. The latter has been the pair’s strongest level since July 11th (18.8022).