Brief Government Shutdown Triggers US Dollar to South African Rand Exchange Rate Decline
The US Dollar has fallen against the South African Rand and additionally made losses against the New Zealand Dollar and Australian Dollar today.
This poor performance comes after the news that the US government was briefly shut down, due to an inability to pass funding legislation.
In a repeat of an incident from a few weeks ago, the US government was technically inoperative because a funding bill was not passed by the House of Representatives.
Unlike the previous bill upset, however, this one was caused by a Republican instead of a Democrat, which highlights just how controversial the issue of US spending is.
The Republican in question was Senator Rand Paul, who objected to the fact that the funding bill would cause a ballooning of the current budget deficit.
After some tense renegotiation on both sides of the house, however the second shutdown of 2018 has since been lifted.
Despite the apparent success, the incident has stuck in the minds of US Dollar traders, leaving the USD a less desirable currency as a result.
This is not least because with tensions in congress being what they are, more shutdowns could be yet to come this year.
The US Dollar may be able to regain lost ground against the South African Rand on 14th February, when national inflation rate data will be released.
If the inflation rate readings show forecast-beating growth then the US Dollar could appreciate, as this would increase the odds of the Federal Reserve raising US interest rates.
South African Rand to US Dollar Exchange Rate Rises on Hopes for Zuma Removal
The South African Rand has firmed against the US Dollar on 9th February, mainly thanks to speculation about President Jacob Zuma’s imminent departure.
Zuma has had an extremely controversial career as national leader, having survived multiple votes of no confidence as well as hundreds of corruption allegations.
While Zuma’s questionable reign has gone on since 2009, there are genuine hopes that he could finally be ousted from office shortly, by his African National Congress (ANC) party.
The President has been blocked from delivering the State of the Nation Address, but there haven’t been any more clear signs that 'enough is enough' for the ANC.
Suggesting that there could still be a moderate wait ahead, ANC Western Cape Provincial Secretary Faiz Jacobs has said;
‘I think transition in any situation is not smooth. I think society and South Africa, in general, must give the ANC a little bit more time and space to handle its internal processes’.
In the event that Zuma announces his retirement or resignation next week, the South African Rand could soar against the US Dollar.
Along the same lines, if Zuma is reported to have been fired from the position of national President then the Rand could also appreciate by a historic amount.
In the unlikely event that the ‘Teflon President’ manages to fend off this latest threat to his leadership, however, the Rand could plummet against the US Dollar over fresh disappointment.