USD/ZAR Stalls as Mining Production Rebounds
- Mining Production increased 5.3% (YoY) in September
- Retail Sales and Industrial Production were also up 2.3% and 8.0% respectively
- USD/ZAR stalls under resistance
Of late South Africa has been characterized by sluggish economic growth and rising inflation. Despite their full year GDP growth rate being cut from 2.4% to 1.4%, they remain under increasing pressure to raise interest rates. However, at their upcoming November 20th meeting the reserve bank will likely hold rates steady at 5.75%, with September’s mining production figures lending reason.
Preliminary production results show mining increased in September by 5.3% (YoY), recording the first positive growth rate since May. In rebounding from August’s -9.2%, iron ore was the largest contributor advancing 5.7 percentage points followed by manganese ore, coal and diamonds. Gold, which accounts for roughly 7% of world production, also increased at one percent. The largest drawback came from Platinum Group Metals (PGMs) which declined 4.1%.
With a positive correlation to production (0.43), mineral sales will likely see a rise in September as they, like production, were down 10.7% in August. The most significant negative growth rates were recorded for iron ore (-40.7%) and PGMs (-31.2%) whose contributing percentage points were -6.6 and -8.2 respectively.
In addition to a confirmed rebound in production and likely rebound in sales, South Africa also saw a jump in September retail sales (+2.3%) as well as industrial production (+8.0%). The largest contribution to these sectors came from a rise in motor vehicle manufacturing (+5.8%) which accounts for 12% of the country’s exports.
Following these positive economic developments, the USD/ZAR remains stalled under resistance after a 9,135 pip rally.
USD/ZAR Daily Chart
Chart Created by Walker England Using MarketScope2.0
Change in Mining Production Relative to Sales
Data Sourced from Statistics South Africa
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.