The currency is reeling from a ‘lethal cocktail’ of poor local and international news and traders are eyeing Friday’s key US jobs data
Having been hit by a plethora of bad news this week, the rand is eyeing its worst level since the early stages of the Covid-19 pandemic and appears set to break through R19/$.
It could be a godsend for exporters, because their goods would be cheaper in foreign markets. But that could be offset by the economics of producing for the export market, which have been trashed by Transnet’s underperformance. IG senior market analyst Shaun Murison said that while in general emerging-market currencies had been driven weaker by a general risk-off mood, “the rand’s short-term underperformance in the emerging-market space can be attributed to domestic news”.
As SA battles the most intense load-shedding yet, analysts say the ministers who head those two departments should have been replaced. “Markets have already discounted an increase of 25 basis points at the meeting in March and a similar rise in June, but strong economic data might pave the way for a 50 basis point hike in March and a higher terminal rate than the anticipated 5.25%,” Van Rooyen said.
Carmen Nel, economist and macro strategist at Matrix Fund Managers, said: “The Reserve Bank is cognisant of inflation risks associated with rand weakness, and should the rand move meaningfully above 19/$ it would very likely respond more aggressively on tightening.”
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