Rand claws back after rates, GDP thump

After weakening by more than 2% against the dollar on Thursday, the rand clawed back some losses in early trade on Friday.

At 10:59 the local currency was trading 0.44% firmer at R13.46 to the dollar, after opening at R13.53. 

It is still trading below Thursday morning's level of about R13.30/$.

Wichard Cilliers of TreasuryONE said in a morning note that the rand had started to weaken on Thursday in the run-up to the repo rate announcement by the SA Reserve Bank.

The central bank’s monetary policy committee decided to keep the repurchase rate unmoved at 6.5%, in line with the expectations of economists.

"[The weakness before the announcement] was not all that unsurprising with equity markets generally under pressure in Europe, while the dollar on a trade-weighted basis made decent gains through the session too.

"After two weeks of outperformance, the ZAR is on the bottom of the pile relative to the emerging market universe this week with losses in excess of 2% versus the dollar," he said. 

Earlier in the week the rand had traded as high as R13.13 to the greenback, and there was speculation that it could break the R13.00 barrier. 

"On a trade-weighted basis, it has lost around 1.5%. This is the second worst performance after the Russian rubble," said Cilliers. 

Adam Phillips of Umkhulu Consulting said the rand was not helped by SARB governor Lesetja Kganyago's remarks that inflationary pressures were on the increase, and SA's projected GDP growth rate had been downgraded from 1.7% to 1.2% for the remainder of 2018. 

NKC African Economics put the local unit's expected trading range at between R13.30/$ and R13.65/$.

* Sign up to Fin24's top news in your inbox: SUBSCRIBE TO FIN24 NEWSLETTER

ZAR/USD
16.60
(-2.04)
ZAR/GBP
21.35
(-1.40)
ZAR/EUR
19.57
(-1.49)
ZAR/AUD
12.07
(-1.65)
ZAR/JPY
0.16
(-2.47)
Gold
1931.29
(-0.84)
Silver
26.32
(-1.42)
Platinum
915.51
(-1.31)
Brent Crude
43.55
(0.00)
Palladium
2332.00
(-0.70)
All Share
53206.70
(-2.68)
Top 40
49006.58
(-2.76)
Financial 15
9514.21
(-3.32)
Industrial 25
70997.11
(-2.15)
Resource 10
53613.68
(-3.29)
All JSE data delayed by at least 15 minutes morningstar logo
Company Snapshot
Voting Booth
Do you think it was a good idea for the government to approach the IMF for a $4.3 billion loan to fight Covid-19?
Please select an option Oops! Something went wrong, please try again later.
Results
Yes. We need the money.
11% - 1315 votes
It depends on how the funds are used.
73% - 8658 votes
No. We should have gotten the loan elsewhere.
16% - 1907 votes
Vote