Rand Report: Tensions increase around Omicron variant. Image: Canva

Rand Report: Tensions increase around Omicron variant

The outbreak of the Omicron variant will be felt across all sectors in South Africa but, most importantly, it will affect interest rates, economic grants and the fuel price.

by Sable International

30-11-2021 15:23

in Business & Finance

Rand Report: Tensions increase around Omicron variant. Image: Canva

The new Covid variant will possibly threaten the country’s GDP recovery as a stricter lockdown in the coming weeks is feared. There was a notable increase in the producer price index, a leading indicator of inflation, thus interest rate hikes could be on the horizon.

After news about the new variant broke last week Friday, the rand weakened against all major currencies, most noticeably against the JPY(-3.07%), USD (-2%) and GBP (-1.36%). The relatively aggressive market moves were pushed into a deepened state on the JSE as there was low liquidity in the market due to Thanksgiving on Thursday and a half trading day due to Black Friday.

The rand is currently trading at 21.55 against the British Pound, 16.12 against the US Dollar and 18.32 against the Euro. Image: Supplied

Across the US, the Dollar has been making large moves since 11 November, when the US released CPI data at 6.2%. This increased bond purchase tapering expectations.

This week sees the release of big employment data from the US, with the ADP employment change on Wednesday, which is expected to increase. This will be followed by US non-farm payrolls data on Friday, which is also expected to increase. Overall, it seems the US labour market is rebounding from the pandemic but should be closely monitored as the country faces a possible fifth wave of Covid infections.