Rand firms ahead of SONA

Rand firms ahead of SONA

The Rand experienced a good week after favourable trade data. Stats SA revealed that there was a R12 billion trade surplus for the month of December, beating the R6 billion figure that analysts had forecast. This came as a relief after November’s disappointing R-1.7 billion deficit.

Rand firms ahead of SONA

Looking abroad, markets remained focused on US policy movements as Donald Trump continues to unveil his 100-day plan. Since the US presidential inauguration, the US Dollar has weakened 1.7% against the Rand.

Locally, all eyes will be focused on President Jacob Zuma and the annual State of the Nation Address. Despite being marred by interruption from rival party, the Economic Freedom Fighters, the 2016 address highlighted five key points:

  • Zuma is listening to the business sector
  • Certain state-owned companies might be phased out
  • Zuma may be pressurised into scaling back on his nuclear ambitions
  • Government is getting serious about wasteful expenditure
  • If the president is keen to move towards having one capital city

Political commentators will consider the progress made on the above points. However, at a glance, it appears there have not been too much progress. Expect to see the Rand weaken if SONA does not inspire confidence in investors.

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What to look out for this week:

Day What’s happening? Why it’s important
Tuesday South African foreign exchange reserves to be released.
  • This helps to hedge South Africa against its foreign liabilities. With such a strong Rand now, we should be stocking up on these reserves for leaner times.
Thursday SONA
  • The speech will hopefully clearly outline government’s views on the current state of affairs and goals for the next year.
Thursday Manufacturing production data will be released
  • A positive number will signal productivity in the manufacturing sector, which would indicate GDP growth on the horizon.


– Anton van Teylingen
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