The rand takes a hit under pressure

The rand takes a hit under pressure. Image: AdobeStock

Rand Report: The rand takes a hit under pressure

The rand lost hold of its previous gains in the forex market last week, with no notable data catalyst poised to give the markets much direction.

The rand takes a hit under pressure

The rand takes a hit under pressure. Image: AdobeStock

The hike of interest rates by the central bank in Turkey, and the coinciding tumble of the Turkish Lira, has caused headwinds for emerging market currencies like the rand. Declining prices in precious metals, along with concerns over continued loadshedding, have put further pressure on the Rand.

GBP/ZAR moved 1.54% higher in the week, closing off around 20.375 from an open of 20.085 on Monday. The USD/ZAR pair followed a very similar price path. After opening for weekly trade at 14.64, the rand depreciated by 1.53% against the greenback, ending the week off at 14.8175. EUR/ZAR experienced the largest movement, rising by 1.96% and closing at 17.25 against the rand. 

South Africa’s September inflation rate was released last week. Year-on-year inflation was reported at 5%, in line with expectations, up from 4.9% in August. Prices rose 0.2% in September, adding to the 0.4% increase in the month prior. Main upward pressure came from prices of transport (10.1%), particularly fuels, as well as housing and utilities (4%).

This week, South Africa’s balance of trade for September will come due. South Africa’s trade surplus is expected to decline from R42.4 billion in August to R28 billion. September PPI figures will also be released this week to complement the inflation data released last week. PPI is expected to come in at 7.2% over the year and 0.8% over the month.

Over in the developed markets, we will have the release of US GDP data on Thursday. GDP growth is expected to come in at 2.5% for Q3, following on from the 6.7% growth in Q2. Durable goods orders figures for September will also come due and is expected to decline by 1%. Personal income and spending figures for the month of September are scheduled to be released. Additionally, we will have the release of the UK’s Autumn Budget. This will likely provide additional information about the UK’s financial strategy for the upcoming period. Furthermore, the Eurozone’s October inflation rate will come due, along with the ECB’s most recent interest rate decision.

Weekly market events

Wednesday 27 October

UK: Autumn Budget

US: Durable goods orders (September)

Thursday 28 October

SA: Producer price index (September)

US: GDP growth rate (Q3)

EU: ECB interest rate decision 

Friday 29 October

SA: Balance of trade (September)

EU: Inflation rate (October)

US: Personal income (September)

US: Personal spending (September)

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