Outlook for South African Rand Ahead of Fed Decision

South Africa is the second
largest economy in Africa with a GDP of more than $349 billion. It is second
after Nigeria, which has a GDP of more than $375 billion. The country’s GDP per
capita is about $6,100 compared to Nigeria’s $1,600. The country’s economy is
mostly based on agriculture, mining, finance, and trade. On mining, the country
is one of the largest producers of gold, platinum, and diamonds among others.

The country’s economy has
continued to deteriorate as the prices of minerals has fallen. The quantity of
the minerals has continued to go down, even as companies reduce their capital
expenditures. Further, the companies have continued to lay-off people, which
has led to more problems for the country. As the unemployment rate has
increased, so has the level of political instability. Last year, the country
replaced its previous president, Jacob Zuma. Still, the country continues to
rank higher in terms of corruption. In fact, a corruption report released on Monday
by Transparency International showed that it is one of the most corrupt
countries on earth.

The USD/ZAR has continued to remain
within a range of 13.5 and 15.7. The reason for this is that the South African
central bank increased interest rates by 25 basis points in November. This is
despite the fact that the country had just emerged from a recession.

This week, the pair’s movement may
be influenced by the Fed interest rates decision and the US jobs numbers. In
case of a dovish view from the Fed, the pair could breach the current support
of 13.5.

The post Outlook for South African Rand Ahead of Fed Decision appeared first on Forex.Info.