Well, strap in for another Weekly Rand Review as we give an account of the South African currency's rollercoaster ride...
...with gains and setbacks, recoveries and reversals, the local currency's performance was as eventful as the headlines that accompanied it.
From reaching a two-month best to bracing against unexpected inflation spikes, political showdowns and internet blackouts, the Rand tended to blow hot and cold...
...and at the end of the day, had not too much to show for all the effort.
Let's delve into some of the key moments, shall we?
Key Moments (11 - 15 March 2024):
Some highlights from the past week:
- Mixed Economic Signals:: The week was marked by a juxtaposition of data: manufacturing output climbed, signaling economic vitality, while mining output downturned, revealing sectoral stress points.
- US Inflation Jitters: US Inflation ticked up unexpectedly, keepng rate cuts at bay, and buoying the Dollar
- Political Drama: As both SA and the US move closer to elections, things are heating up on both fronts, with drama aplenty
- Massive Internet Outage: South Africa and many West African countries were affected by at least three damaged undersea internet cables.
So, let's get into it...
After its second week of solid gains, the Rand started the week on another positive note after opening in early trade in the mid-R18.70s against the Dollar...
...after an initial push above R19.80, it was almost immediately off to the races, as the local unit pushed lower through the day to hit R18.63/$ - before letting the foot off the gas a bit in after-hours trade.
But before the local trading desk had even opened on Tuesday, the local currency was again flexing its muscles, thrusting still lower to hit R18.55/$...
...its best level for over a month - as the market awaited inflation data out of the US in the afternoon.
When it came through, there was a bit of a surprise, with the annual inflation edging up to 3.2% in February 2024, compared to 3.1% in January - and above forecasts of 3.1%...
...as a result, the Dollar (DXY) jumped higher, pulling the Rand weaker as it tested the mid R19.70s.- before recovering somewhat to end the day in the mid-R18.60s.
After Tuesday's setback, the Rand lost some ground early on Wednesday to retest the prior day's high, but then managed to find its fight once again, as it thrust below Tuesday's low to hit a 2-month best of R18.50 to the USD, as the greenback also lost all it had gained the day prior.
Meanwhile, in other news this week:
- On the South African political front, old 'JZ' seems to be really putting the proverbial spanner in the works, following his backing of the recently-launched uMkhonto weSizwe (MK) party, with the party having now nominated Zuma to be its presidential candidate, despite his criminal record...
...and threatening the IEC that it will unleash political violence if Zuma is not on the ballot paper.
The SA political circus seems to be taking on some new acts (with old performers) as we lead up to an election where it looks increasingly likely the ANC while fail to gain 50%...
...with several potential kingmakers in the wings - none of which give one any confidence!
- On the US political front, both Donald Trump and Joe Biden secured their respective party nominations last week, as things start heating up ahead of the November elections...
...amidst an escalating border crisis and an administration that seems more concerned about protecting other countries' borders and citizens than its own...
To get back to the Rand...
Thursday dawned with the Rand sitting off its best but still below R18.60/$, but it could not hold onto these gains amidst a mixed bag of mining and manufacturing data releases.
- On a positive note, manufacturing output rose 2.6% YoY in January, higher than expected, with December output also being revised upwards to 1.3% YoY.
- But new mining figures showed an unexpected downturn. Total mining output was down 3.3% year-on-year in January, while gold production was down 12.7% year-on-year!
The Rand was also affected by a resurgent US Dollar which reacted to its own set of mixed news, with Retail Sales showing a marginal increase of 0.6% MoM (less than expected)...
...while the Producer Price Index (PPI) rose by 0.6% MoM in February 2024, representing the biggest increase since last August and surpassing the 0.3% market expectations.
The Rand was caught in the wake as the Dollar pushed higher, with the week's gains all-but being erased as it tested R18.79 before pulling back a few cents.
Of course, the local currency was not helped by the massive internet outage caused by at least three subsea cables off the west coast...
...which not only affected Saffers, but other countries including Nigeria, Ghana, Liberia and Ivory Coast.
And then it was Friday!
And the Rand seemed to have a day that mirrored the week - starting the day in early trade by losing a bit of ground before pushing stronger to test R18.65/$ in the early afternoon...
...but then gave it all back as the Rand simply rolled over with a whimper, ending the day and the week in the mid R18.70s...
Back where it had started the week!
All that effort - with nothing really to show for it...
...and that was that!
The Week Ahead (18-22 March 2024)
Well, as we head into the latter half of March (already!), this is what we will be keeping an eye on:
- SA - Inflation Rate
- US - Fed Rate decision, Jobless claims
- UK - Inflation, BoE Rate decision
So some big triggers this week, expect much volatility.
But as we have the seen the past few weeks, these events are merely triggers for the market to move - NOT direction-givers.
For direction, we continue to turn to our Rand forecasting system, which gives you a roadmap of where the market is likely to head based on the sentiment cycles currently in play for the coming days, weeks and months ahead...
...and take the RIGHT action...at the RIGHT time!
Hit the link below to get access to our latest predictions.
Until we meet again, safe trading!
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.
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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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