Welcome to another issue of our Weekly Rand Review.

This past week, the Rand demonstrated remarkable resilience in the face of global market turmoil and continued domestic economic challenges.

With stock markets plunging and local manufacturing data disappointing, the ZAR's journey was nothing short of another rollercoaster.

Let’s dive into the key events and how they shaped the Rand’s performance this week

Key Moments (5-9 Aug 2024):

In some major headlines over the last five days:

• Global Market Crash: Black Monday on Tokyo stock exchange sparks a global market crash
• Bank & Manufacturing Woes: SA Manufacturing Production fell for the second month running. And Sasfin is in the news - and dwang - again
• A Win for Crypto vs SEC: The long battle between Ripple/XRP and the SEC concluded with a token win for the SEC, but a major victory for crypto
• Russia/Ukraine Conflict Twist: An incursion by Ukraine into Russia adds a new dimension to the ongoing conflict

The market opened on Monday with a bang after a massive sell-off in the Tokyo stock exchange rocked the markets, sending the USD/ZAR immediately higher after opening around R18.21/$, so that by the time the SA banks opened for trade, the market was already up around R18.40 to the dollar.

Once again, our prediction technology enabled us - and our clients - to be ahead of the game, as can be seen from the chart below, published the prior week, which showed how we expected the market to rise into the 18.38-18.66 area.

(enlarge here)

Getting back to what triggered it, Japan's benchmark Nikkei index lost 12.4% of value - the worst day for the index since the "Black Monday" of 1987 - and wiping out all its gains this year.

Of course, the jitters hit the JSE, with stocks dropping sharply lower across the board.

And the Rand soon felt the pain as traders ran for cover, pushing the local unit still higher to make a brief sortie above R18.66/$...

...but somehow the Rand managed to pull things back to close out the day just below R18.50 per US$.

It wasn't just stocks and currencies that were affected in the rout...

...cryptos were having their own meltdown, as the market suffered a flash-crash over the weekend, with Bitcoin dropping to below $50k after having touched $70k just a week earlier!

Tuesday saw the Rand initially push stronger to test R18.40 before losing ground as the market pushed back towards R18.60/$ but again, the Rand found some fight and pulled things back to end the day around R18.45.

Though the tremors were still being felt from Monday's market crash, some support seemed to have been found as stock markets recovered some of the losses.

Wednesday was a much better day for the Rand, as it managed to capitalize on Tuesday's momentum, driving all the way down to R18.27 per US$ before giving back a few cents in after-hours trade.

The middle of the week was marked by Sasfin Bank appearing in the news - once again for the wrong reason...

...with the entity now being levied a fine of R210 million by the South African Reserve Bank for historic non-compliance within Sasfin Bank’s discontinued foreign exchange business.

This comes on top of Sasfin facing R4.87 billion civil claim from SARS with its staff being involved in laundering money in exchange for bribes from an international gold smuggling syndicate...

...and its decision last month to delist from the JSE.

Eish...a rather sad state of affairs for a bank that at one point was giving the big boys a run for their money...

In other news:

In what has been regarded a major win for the cryptocurrency market, the years' long legal battle between Ripple Labs and the U.S. Securities and Exchange Commission (SEC) concluded (barring any appeals), with Ripple being ordered to pay a $125 million civil penalty for the sale of Ripple's XRP token to institutional investors without registering it as a security.

The SEC had initially sought $2 billion in penalties, disgorgement, and interest, but the court significantly reduced this by +-94%, with Ripple CEO Brad Garlinghouse hailing this as a victory, stating that the ruling provided clarity for Ripple to continue its operations and was a positive outcome for the cryptocurrency industry as a whole (which the SEC has had in its sights for some time now to try and regulate).

The court found that XRP was subject to securities laws only when sold to institutional investors, but it denied the SEC's request for Ripple to disgorge profits from these sales. The case did not involve any allegations of fraud, and the SEC was unable to demonstrate that Ripple's actions caused substantial losses to investors.

Interesting times ahead on this front...

And then, in a new twist to the Russia/Ukraine conflict, as many as a thousand Ukrainian troops reportedly crossed the border into the Kursk region in Russia, capturing an estimated seventeen square miles of territory, with Russian President Vladimir Putin calling the move a “major provocation.”

Whether this August surprise is an attempt to divert the Russian steady advances in the East or a move in order to have some bargaining chips at the negotiation table remains to be seen, but the size and depth of the incursion does add a significant new dimension to the ongoing conflict.

As for the Rand,

Thursday was a choppy day, with the market bumping around in a 12-cent range and ending where it had started in the mid-18.30s.

This came amid the not-so-encouraging news that local manufacturing production in South Africa plunged by 5.2% year-on-year in June 2024, following a revised 1.2% fall in May - a concerning picture for this sector and the economy as a whole.

Meanwhile, stock and crypto markets had made some good signs of recovery following the crash a few days earlier, but it remains to be seen whether this is just a correction - or a bullish reversal.

With Friday being a public holiday, it was a relatively quiet day, with not a lot of activity, but the Rand did manage to gain a few cents with offshore trading as it tested below R18.30/$ and managed to hold around this level to end the week...

...having lost close to 10 cents against the Dollar...

...but a good 40 cents better off than it had looked at the beginning of the week!

So overall, an encouraging performance!

And once again, a week with opportunities for both importers and exporters.

The Week Ahead (12-16 August 2024)

We have a few potential triggers on the horizon in terms of data releases, which could give some idea as to what is happening with the local and global economies:

• SA: Mining/Gold Production, Retail Sales
• US: PPI, Inflation, Retail Sales
• UK: Inflation, GDP, Retail Sales

Of course, one must remember that these are all releases of historical data and are backward looking and they therefore are not a great forward-looking tool to give you an idea of what can be expected in the future...despite economists trying to use them for this purpose!

We prefer a forward-looking tool to help us see where the market is heading - based on what the market itself is telling us!

We recommend you do the same!

Are You Making Informed Decisions?

To give you a little helping hand, feel free to take our Rand forecasting service for a test-drive!

This will give you access to the same charts we are to give us and our clients the likely direction of the Rand - ahead of time, enabling you to make educated and informed decision.

Simply use the link below to get access now.

This will give you access to the same charts we are to give us and our clients the likely direction of the Rand - ahead of time, enabling you to make educated and informed decision.

No charge. No card. All yours to trial for 14 days.

If you have any questions or feedback, please leave them below.

To your success~

James Paynter

P.S. Worrying about how to in manage your Rand exposures this year? Email me or give me a call on (041) 373-6310 or (087) 551 2848 - we would love to help.

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