The South African rand gained against the U.S. dollar for the fourth day today as the stock markets throughout the world were stimulated by the Federal Reserve’s decision to pump about $200 billion into the global banking system.
The strongest African economy may soon lose its position — at least so tells us its currency. South African rand appears to be one of the worst performing currency of 2008.
Last month South African Reserve Bank bought less foreign currency reserves than in December 2007, as one of the ways to help the rand avoid further weakening.
South African national currency, rand, showed this week a highest gain against U.S. dollar since October, based on a high probability that the South African Reserve Bank will increase the benchmark interest rate again after the inflation continued to grow.
South African rand has fallen this week losing almost 2% against the U.S. dollar compared to its last Friday’s close rate. It was the second straight loss week for USD/ZAR as the Forex traders were leaving carry trade positions before the holidays period uncertainty and on the bad political background in South Africa.
South African Reserve Bank decreased its foreign currency purchases volume almost by a half after the national currency felt significantly against the U.S. dollar in November. Depreciated rand kept country’s central bank from increasing their Forex reserves at the previous pace.
Another carry trade crisis victim - South African rand saw its bad times during the past week. ZAR closed on its lowest rate against Japanese yen (which can be easily called the “favorite” of the week) since the mid September - 15.8549 yens per rand.