The rand weakened on Tuesday as a strong US dollar overshadowed data indicating an expansion in economic activity, as signalled by the central bank’s leading business cycle indicator.
The rand traded at 17.1125 to the dollar, a decline of about 1.8%. The currency had recovered some recent losses on Monday after US President Donald Trump backed away from plans to target Iran’s energy infrastructure, which boosted demand for risk-sensitive currencies like the rand.
However, sentiment turned cautious again after Iran denied negotiating with Washington, reviving concerns about an energy-driven economic shock.
According to central bank data released on Tuesday, South Africa’s composite leading business cycle indicator rose by 0.4% month-on-month in January.
This index tracks several factors, including vehicle sales, business confidence, and money supply.
Investors are now looking ahead to Thursday’s central bank rate decision, with economists polled by Reuters expecting the bank to maintain its main lending rate at 6.75%.
The US dollar was last up 0.2% against a basket of currencies, with oil prices rising due to supply concerns.
Johannesburg’s Top-40 index was last down 0.3%, and the benchmark 2035 government bond weakened, with the yield increasing by 12.5 basis points to 9.01%.
As of Wednesday, 25 March, the rand is trading at R16.94 to the dollar, R22.70 to the pound, and R19.65 to the euro. Gold is currently valued at $4,812.13 per ounce, while oil prices have risen to $66.03 per barrel.
5 important things happening in South Africa today
Western Cape water trouble: The Western Cape has about six months of water left in its dams, according to the provincial Water and Sanitation Department. The six largest dams account for 48.8% of the total. The Theewaterskloof Dam, which supplies 51% of the province’s water, has decreased by 18% to 47.4%. [EWN]
Bad news for outstanding fines: Fines SA CEO Barry Berman states that the era of South African motorists avoiding traffic fines is over. Motorists who fail to pay their fines will face consequences. He recommends checking for any outstanding fines before heading out for the Easter weekend. [MyBroadband]
Caution for anyone wanting to fly: Airlink Chief Executive de Villiers Engelbrecht said that the airline has enough fuel for March and April, but uncertainty still lingers. Aviation expert Linden Birns noted that the evolving situation complicates projections for when domestic airlines may need to adjust their flight plans. [Moneyweb]
Ramaphosa to crack down on the Free State: President Cyril Ramaphosa is expected to take decisive action when he meets with the Free State ANC provincial executive committee (PEC) and the province’s government leaders on Thursday and Friday to discuss the deterioration of municipal services. [Mail & Guardian]
South Africa’s GDP nightmare: If South Africa maintains its current GDP per capita growth trajectory, living standards will stagnate for a generation. Over the past decade, growth has averaged near zero, unlike in other emerging markets, where citizens’ living standards have doubled. [Daily Investor]
