The rand strengthened after domestic data indicated an improvement in the leading business cycle indicator for October compared to September, along with slightly lower-than-expected inflation for November.
The rand was trading at 16.7050 against the dollar, approximately 0.3% stronger than its previous close.
According to data from the South African Reserve Bank, the leading business cycle indicator increased by 0.4% month-on-month in October, following a 0.2% decline in September.
This indicator encompasses data on vehicle sales, business confidence, money supply, and other relevant factors.
November’s consumer inflation rate was reported at 3.5% year-on-year, supporting expectations that the central bank may further reduce interest rates next year.
Economists surveyed by Reuters had anticipated that annual inflation would remain unchanged at 3.6% for November, consistent with October’s rate.
In its last monetary policy meeting, the South African Reserve Bank lowered its main lending rate by 25 basis points to 6.75%, attributing this decision to a more favourable inflation outlook.
On the Johannesburg Stock Exchange, the Top 40 index rose by 1.3%.
On Thursday, 18 December, the rand was trading at R16.77 to the dollar, R22.42 to the pound and R19.70 to the euro. Oil was trading slightly lower at $60.06 a barrel.
5 important things happening in South Africa today
US firm after billionaire Motsepe’s companies for R3.2 billion: US-based Pula Group sued Motsepe’s ARC, African Rainbow Minerals (ARM), and Arch Sustainable Resources in 2023 for $195 million (more than R3.2 billion), alleging a breach of a 2019 confidential agreement. However, Anthony Mundell, representing ARC, argued this week that the agreement was signed in Johannesburg, granting the SA High Court the authority to overturn any unjust outcomes from the ongoing litigation in Tanzania. [Business Day]
End of Post Office’s monopoly on small parcel deliveries: On 12 December, Malatsi announced the first major change to reserved postal services in 25 years by removing small parcels from the list. While the Post Office retains its monopoly on letters and postcards, it will no longer control courier services for parcels under 1kg. Private operators had already largely overlooked the weight limit. The Post Office hoped the communications regulator would fine companies violating this exclusivity and share the proceeds. [News24]
Temu and Shein warning: A group of consumer associations from Belgium, Germany, and Denmark analysed 162 products from Temu and Shein, revealing that nearly 70% violated safety standards. The tested products, including USB chargers, necklaces, and children’s toys, showed significant non-compliance with European regulations. Additionally, a 2024 MyBroadband test found that Temu allowed merchants to sell unapproved electronics in South Africa. [MyBroadband]
Municipal crackdown in South Africa: 75 municipalities are at risk of not receiving their equitable share this month due to alleged financial mismanagement. These transfers are crucial for their functions, especially as they struggle to collect debts from consumers and businesses. [Moneyweb]
Trouble for food prices in South Africa: Annual consumer price inflation eased to 3.5% in November from 3.6% in October, dropping by 0.1% month-on-month. However, despite the positive of lower inflation, the data also reflected another worrying assessment: food price inflation is rising, driven by higher meat prices. [BusinessTech]
