This past week we saw the ZAR continue to depreciate against all major currencies, despite a small recovery yesterday.
The Rand ended last week more than two percent down as investors who had bought cheap ZAR-based assets earlier in the week sold out. Firm US data also piled pressure on the local currency. This week should see the market stabilise as it has had time to adjust to Minster Malusi Gigaba’s negative mini-budget presentation.
It’s been a rough ride for the Rand this last week. The Budget Speech set off a period of Rand weakness that has yet to abate. While Rand fundamentals are looking quite dire, and our political situation looking murky as ever, the local currency has managed, perhaps only just, to hang on.
The Rand experienced significant gains toward the back end of last week. The South African currency closed the week at 17.624 and 13.267 against the Pound and US Dollar respectively. This translated to a business week gain of 2.63% against the Sterling and 3.51% against the Greenback. However, following a surprise cabinet reshuffle, the Rand lost some of these gains at the start of this week.
Over the past week we have seen the ZAR weaken quite a bit. The reasons for this move has been attributed to numerous factors, such as the improved outlook on the USD and local political scandals rocking the market. In the UK and the US, there have been statements regarding raising of interest rates, which definitely contributed to the ZAR’s slide.
The Rand opened slightly weaker against the Dollar last week at R13.0602. The Rand has since strengthened in early trade on Tuesday, with demand spurred by higher gold prices ahead of the second quarter economic growth figures, and is currently trading at 12.9502.
For now, any ZAR weakness needs to be seen against the backdrop of a defensive USD. The post Trump rally has now been undone as the USD is trading at levels last seen a year and a half ago. The Greenback is staying above the 13.00 USD-ZAR mark.
Last week Monday it was announced that an eighth attempt to oust Zuma was scheduled to take place, only this time the vote of no confidence would be a secret ballot, thus protecting those ANC members who have switched to the anti-Zuma camp. The Rand reacted virtually instantly to the announcement, seeing the ZAR strengthen […]
The South African Rand has weakened by 4% over the past couple weeks as renewed credit ratings concerns started to surface. On Monday, Moody’s released a report that cited ongoing structural growth concerns and worries over the independence of the South African Reserve Bank.
It’s been an interesting week. Last week began with Chinese data surprising on the upside, causing the commodity currencies (ZAR, AUD) to strengthen. That momentum held with UK CPI data disappointing, as it came in below expectations. On the local front, the SA CPI dropped slightly, putting it firmly in the target range.
Last week the Rand weakened on news that the controversial mining charter would be implemented, and opened at R13.5667 before ending the week on a stronger note at R13.0332. This regaining of strength was largely on the back of settling local politics and a weaker USD.
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”.
The last seven days have seen a lot of volatility in international markets. At the same time, there have been numerous recriminations and scandals coming to light thanks to the Gupta leaks. Together with some uninspiring economic data, the Rand has remained remarkably resilient under pressure. Let’s take a more in-depth look at why this is happening.
As expected, the US Fed raised interest rates by 25 basis points last week. The move dampened demand for high-yielding emerging market assets.
Last Friday evening Moody’s confirmed market expectation when it downgraded South Africa’s long-term and senior unsecured ratings to Baa3 from Baa2. This now sits only one notch above junk status. The Rand softened in the hours after the announcement but gained momentum on Sunday evening, trading at lows of 16.17 to the Pound.
The Rand found itself in a dominating position in the final phases of May, owing mainly to the recent drop in inflation. Another possible explanation to the rally against the major currencies was last week’s unchanged ratings from Fitch and S&P, as well as the greenback sell off after Friday’s disappointing US jobs data. Moreover, today’s UK election is likely to play havoc with the Rand’s value.
Last week saw South Africa’s political and financial news dominated by rumours that the ANC’s national executive committee was considering a motion of no confidence in president Jacob Zuma. This is a huge step for South Africa, as this is the first time we are seeing the ruling party turn on its own leader.
Over the last two weeks we have seen the ZAR slowly lose ground against the major currencies. This comes after some surprising resilience in the currency after the downgrades in preceding weeks. Durban hosted the World Economic Forum summit on Africa last week, where we saw the new finance minister, Malusi Gigaba, try and reassure investors that the treasury remains committed to fiscal consolidation.
The South African Rand ended last week on a back foot after the first-round French election results favoured nominee Emmanuel Macron and his party. Macron emerged as a favourite after securing 24.01% of the vote versus Marine Le Pen’s 21.30%.