The rand strengthened slightly in early trading on Wednesday as investors awaited updates from the upcoming meeting between US President Donald Trump and Chinese President Xi Jinping in Beijing.
The rand traded at 16.4517 against the dollar, approximately 0.4% above its previous close. The Trump-Xi summit is scheduled to take place from Thursday to Friday.
Trump has indicated that he does not believe he will need China’s assistance to resolve the conflict with Iran, even as Tehran tightens its control over the Strait of Hormuz.
Analysts noted that markets are not anticipating any dramatic breakthroughs, with Trump himself having stated that Iran will not be a major topic of discussion.
However, any indication that China might help encourage Iran to reopen the Strait of Hormuz would significantly boost oil prices, inflation, and global markets.
Oil prices dropped on Wednesday, ending a three-day rally as investors prepared for the high-stakes summit in China.
Analysts added that a positive outcome in Beijing this week could provide meaningful relief for South Africa and the rand.
On the Johannesburg Stock Exchange, the Top-40 index was up 1% in early trading. South Africa’s benchmark 2035 government bond also showed strength, with the yield decreasing by 4 basis points to 8.74%.
On Thursday, 14 May, the rand was trading at R16.41 to the dollar, R22.20 to the pound, and R19.23 to the euro. Gold is trading lower at $4,706.47 an ounce, while oil prices were at $106 a barrel.
5 important things happening in South Africa today
SARS warning to first targets: The tax authority plans to accelerate the collection of R44 billion in undisputed debt owed by taxpayers who do business with the state. “You cannot benefit from the state and not be in good standing in terms of taxes,” said South African Revenue Service commissioner Johnstone Makhubu during his first presentation to parliament’s finance committee. [Business Day]
Andre de Ruyter’s nightmare coming true: Former Eskom CEO Andre de Ruyter’s warning about the utility’s unsustainable cost path is coming true. Eskom acknowledged that lower sales volumes increase pressure on prices due to high fixed operating costs. Consequently, as Eskom sells less electricity, customers can expect higher prices, a trend that has continued for the past 15 years. [Daily Investor]
Bad news about Starlink in South Africa: The Independent Communications Authority of South Africa (ICASA) has said that it would not consider changing regulations on BEE ownership requirements for telecoms licences until the law is amended. [MyBroadband]
Car manufacturers in the firing line: The Automobile Association (AA) is launching a campaign to hold vehicle manufacturers criminally liable for deaths or injuries in accidents that could have been prevented by adhering to Global NCAP safety protocols. [Moneyweb]
Transnet picks 11 private companies to operate its rail networks: Transnet has given 11 private firms permission to operate trains on the country’s freight rail network. Grindrod, Minrail, Menar, and Barberry are among the companies that have succeeded in obtaining concessions. [eNCA]
