The rand weakened in early trade on Friday, pressured by a firmer US dollar, while oil market developments played an increasingly important role in shaping the currency’s direction.
The rand traded at 16.85 against the dollar, about 0.5% down from its previous close. The dollar has emerged as one of the clearest safe-haven winners, rising by more than 2% so far this month.
The dollar rose 0.2% against a basket of currencies as Federal Reserve Chair Jerome Powell signalled one rate cut this year.
Additionally, hawkish comments from the ECB, BOE, BOJ and Swiss National Bank pointed to possible tightening amid inflation concerns driven by higher energy costs.
“The local currency will continue to take its cue from international moves, with a keen focus on what the oil price does,” said Andre Cilliers, Currency Strategist at TreasuryONE.
Domestically focused traders will next week look to the composite leading business cycle indicator by the central bank, and producer inflation data by the statistics agency for clues on the health of Africa’s most industrialised nation.
South Africa’s benchmark 2035 government bond was firmer in early deals, as the yield fell 5.5 basis points to 8.995%.
As of Monday, 23 March, the rand is trading at R17.12 to the dollar, R22.81 to the pound, and R19.77 to the euro. Gold is currently valued at $4,375.74 per ounce, while oil prices have risen to $112.8 per barrel.
5 important things happening in South Africa today
Two South African brothers lose R1.46 billion: Blu Label Unlimited founders Brett Levy and Mark Levy lost R756 million and R704 million, respectively, over the last seven months due to the share price decline. However, this is likely to change. Blu Label’s outlook has shifted significantly following the successful restructuring and separate listing of Cell C last year. [MyBroadband]
New criminal group: A new report noted that criminal groups in prisons and pre-trial detention centres are increasingly targeting South Africans for low-level scams, given prisoners’ access to cell phones and basic technology through compliant prison guards. [Daily Investor]
Blow for Debonairs: The Advertising Regulatory Board’s directorate stated that Debonairs Pizza’s claim that it is “Home of Mansi’s Fave Pizzas” is unsubstantiated due to insufficient verification. This follows new evidence presented by the brand, owned by Famous Brands, after a December ruling noted the absence of independent expert verification. [News24]
Interest rate freeze expected: The surge in oil prices driven by the Middle East war has likely ruled out an interest rate cut at the South African Reserve Bank’s meeting this week. However, the monetary policy outlook for the rest of the year remains uncertain. [Business Day]
Bad news for Zimbabwean permit holders: Operation Dudula is taking Home Affairs Minister Leon Schreiber to court over his decision to extend Zimbabwean Exemption Permits (ZEPs) by 18 months, which will expire in May 2027, arguing that he lacked the authority or followed improper procedures in extending the ZEP deadline. [Moneyweb]
