Apart from the glittering record of gold, a rebound in the value of the Euro against the US dollar has been the most commented-on feature of the last month
However in scale terms it has been the continued climb by the Swiss franc that has had the most impact. This 'refuge' currency is now at its highest point of recent years even though the short-term interest rates offered by Swiss banks, so popular in Africa, continue at the very low US level.
Apart from security what speculators like is that excellent sustained record on domestic inflation, as near to zero as it gets – just as in more economically troubled Japan. What they're not so keen on is this year's poor performance (in local currency terms) of the Swiss equity markets. Better returns can be obtained just across the border, but we still think this currency is a good one to hold.
Yen and GBP
Neither Japan's yen nor the UK's pound sterling have changed much against the weakening dollar this past month; these are the currencies to hang on to if you want security above all else, especially in a market where oil is falling and both hard and soft commodities (except, surprisingly, rice) continue to perform exceptionally well.
So what's behind that euro surge, which is having such an unwanted effect in Africa's CFA Zone where cotton exporters are struggling despite the surge in demand? Certainly not the pace of progress towards resolution of the mounting economic difficulties being faced on Euroland's fringe. The stock markets are one cause. A much better record on inflation than rival Poundland is another. Economic growth prospects are much the same, but in terms of industrial output, especially Germany's, the mainland is doing much better, including with its sales of capital equipment to Africa. So we think the euro's strength will continue.
Overview
Apart from developments in commodities none of this helps Africa much. The disharmonious OPEC meeting on 8 June left Africa split down the middle, with Nigeria not getting the bigger output quota it campaigned for last year despite the falling price and the disappearance of Libyan light from the market. Several local currencies have fallen against the dollar, such as those of Kenya and Ghana, helping exporters and tourism operators there. Meanwhile in the rand zone times have got tougher, back to the unwanted strength last seen in April; this core unit is now more than 10 per cent stronger than it was at the height of World Cup fever, a crippling gain. And there's no sign of a South African taking over at the helm of the IMF, either.
