Economic indicators were in negative territory this week, while the rand was literally all over the place due to politics.
It was another roller-coaster week for the South African economy and the rand as politics still played a role with the new cabinet announced late Sunday night.
However, she says, Sunday’s announcement of the new cabinet brings much-needed certainty, although it is too soon to tell how these ministers will perform. She also finds the clarity regarding the energy portfolio, with all the power in the hands of Electricity and Energy Ministerexchange rate recovered from Tuesday’s losses on Wednesday and Thursday. The weaker dollar, in turn, led to a higher gold price. Meanwhile, Brent crude traded close to a two-month high mid-week following data showing a sharp decline in United States inventories and worries that hurricane Beryl could threaten production.
However, new vehicle sales indicate a sector under pressure, Shange says. According to the National Association of Automobile Manufacturers of South Africa , new vehicle sales declined sharply by 14% in June compared to a year ago, following another sharp decline of 14.2% in May. Isaac Matshego and Busisiwe Nkonki, economists at the Nedbank Group Economic Unit, say the rand closed at R18.24/$ against the dollar on Thursday, stronger than the R18.40/$ on Wednesday. The weaker dollar, as US economic data reinforced expectations of the Fed cutting rates in September, benefitted the local unit.
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