Welcome to another Weekly Rand Review as we keep you updated with all the happenings for the local currency for the paat week...
...as it continued to face headwinds locally and internationally, with geopolitical tensions rising in the Middle East especially...
And the risk appetite for emerging market currencies took a knock, with the Rand tumbling to its worst levels since February.
But this was not all unexpected, as you will see...
Key Moments (15-19 April 2024):
Some news highlights from the past week that caught our attention:
- Inflation subsides, but not enough: Domestic inflation slowed but not enough to warrant rate cuts.
- MIddle East tensions rise: Iran and Israel have upped the ante as they traded fire with each other, increasing the risk of a wider regional conflict
Well, another dismal week for the Rand as the local unit registered its worst levels in 6 weeks (just two weeks after after coming close to its strongest price this year against the Dollar)...
...as economists and currency pundits blamed geopolitical tensions for the souring of risk sentiment towards emerging market currencies.
Isn't it fascinating how economists and so-called currency pundits can find all the reasons as to why the market has moved as it has...
...but ALWAYS after the fact!
But, guess what?
...as can be seen from the forecast below, which we published the Wednesday prior, with the Rand sitting at R18.76 to the Dollar after hitting R18.41/$ a day earlier...
(Click to enlarge)
Based on our forecasting system, we were expecting the market to rise strongly after a dip - pushing up into the 19.02-19.38 area in the coming days...
...meaning that we were expecting market sentiment to turn against the Rand...
... before it ACTUALLY DID!
And that is pretty much how things played out, as the Rand strengthened a bit the next day before weakening on Friday (as per last week's Rand Review).
Come Monday, the Rand opened in the mid R19.80s, and initially tested the R19.80/$ in the lead up to SA trading open, and then things quickly turned sour, with news of Iran's retaliatory strike against Israel.
And that was the last we saw of these levels for the week, as the Rand lost ground through the SA trading window before pulling back below R19.00 in after-hours trade...
...and is so doing, validating our forecast of the previous Wednesday
The pullback was short-lived as Tuesday saw the Rand lose ground against the Dollar as it tested the R19.10 level before managing to put the brakes on and close out the day around the R19.00 level.
With not much to provide triggers, the market bounced around in a R18.91-19.10 range for the whole of Wednesday...
...despite news that inflation had slowed slightly to 5.3% YoY - not enough though to warrant any hopes of an interest rate cut
...and then it was time for our next short-term update (see below)...
(Click to enlarge)
As can be seen, we were expecting more upside in the coming days, with the Rand expected to push into the R19.18-19.39 area - levels we had last seen in February.
And it didn't take too long for this to play out!
As shown in the week's movements below, Thursday dawned with the Rand still bumbling around the pivotal R19 level against the US dollar.
And in almost carbon copy of Monday's move, the Rand tested a few cents stronger in pre-South Africa trading...
...but then the wheels came off, as the Rand weakened steadily throughout the SA trading window, hitting R19.20 before recovering slightly to close out the day around R19.10 to the US dollar.
Then it was Friday...
and it didn't start well at all for the local unit, with the USD/ZAR immediately catapulting higher in the early hours to test R19.39/$ - a key resistance level!
Somehow, the Rand finally found some punch, as it fought back impressively to gain all of 35c through the day on Friday before closing out the week around R19.10...
...overall, a very lacklustre performance, but it could have been a lot worse if that resistance level had been broken above!
Once again, though, there were opportunities for exporters and importers to benefit...
...if you had the roadmap of course - and had taken the right action at the right time
The Week Ahead (22-26 April 2024)
As we enter into the latter end of April, it seems that things are not becoming any less hectic, with plenty volatility and tensions internationally!
Below are some potential triggers for this week:
- SA - PPI
- US - Durable Goods, GDP
It has been pleasing to see our forecasting system keeping us in front of the curve - and again, we will be looking at some key levels this week to confirm likely direction for the coming days, weeks and months ahead...
If you are flying blind by the seat of your pants, BEWARE - you will burn your fingers... and your bank balance!
to make the RIGHT decisions...and take the RIGHT action....at the RIGHT time!
Hit the link below to get access to our latest predictions.
Until we meet again, keep your wits about you!
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.
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(You don't want to regret not having done so this time next week...)
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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