treasury intervenes

The Rand falters as local political risk rises

Last week saw the Rand experience yet a further decline due to the political turmoil in South Africa. The scuffle to gain control of state-owned assets has now spilled over to the private sector. Zuma announced that land expropriation without compensation should be allowed where it is “unavoidable and necessary”.

treasury intervenes

This announcement, coupled with the nationalisation of the Reserve Bank rumours and the endorsement of the Mining Charter, resulted in a 1.5% decline of the Rand in just a couple of hours.

Friday saw Finance Minister Gigaba talking about the potential need for foreign financial assistance on international Bloomberg TV –  a worrying sign and acknowledgement that will surely add to the pessimistic external perceptions of the South African economy.

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On the global front, political tensions are also high. Last week saw North Korea carry out its first successful test of an intercontinental ballistic missile (ICBM). This missile has raised questions about how successfully the US can defend itself against North Korean missiles. Further debates and precautionary measures are sure to follow. The Russian and US tensions were also put in the spotlight last week as Putin and Trump met face to face at the G20 summit.

Shortly afterwards, Donald Trump Jr.’s lawyer acknowledged that his client received an email last year offering a meeting with someone who had potentially damaging information on Hillary Clinton. News of this will surely be an important topic in the week to come.

At the time of this report, the Rand was trading at:

17.51 GBP/ZAR

15.45 EUR/ZAR

13.56 USD/ZAR

What to look out for this week:

Day and region Event Why it’s important
Tuesday (UK) UK Prime Minister Theresa May speech Expected to deliver a speech focusing on issues of the country’s foreign policy.
Wednesday (China) Foreign Direct Investment Presents the total investment capital made by foreign enterprises, economic organisations and individuals.
Wednesday (USA) Fed’s Yellen testifies FED’s chair testifies before the Congress to explain current economic situation and policies aimed to improve it.
Wednesday (Canada) Bank of Canada’s Monetary policy and interest rate decision This statement is the primary medium used by the bank to communicate with investors.
Friday (USA) Consumer Price Index The CPI is a key indicator to measure inflation and changes to purchasing trends.


By Daniel Glyn-Cuthbert

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