The unwavering strength of the Rand continues, as it withstands the bombardment of global uncertainty and concern over the Russia and Ukraine situation.
And that is before local troubles too, which also weigh on the markets.
Yet what we saw instead was remarkable, and really inexplicable strength from the local unit amidst a strong Dollar which up until recently has largely dictated the Rand's bigger swings.
But for now, the uncertainty of the ongoing conflict is keeping many markets in a holding pattern...
...let's get into the full review to see if we can get insight into what comes next!
Here were the biggest talking points from the 5 days:
- Escalating Conflict - while the world was hoping for a de-escalation, it doesn't seem to be trending this way as talk after talk ends without result, and the Russia/Ukraine situation only gets worse
- Interest Rates - the inevitable has happened with the Fed hiking rates, but how much more inflation and interest pain is there still to go?
- Motion of No Confidence - not a term we have heard for some time, but suddenly it is happening again and this time it is Rampahosa not Zuma!
So starting with the opening of the Rand, we saw the USDZAR market begin trade around R15 to the Dollar.
Everyone was on tenterhooks still as we awaited clear indication of the direction of the Ukraine conflict...
…but the news that filtered through during the week was not too encouraging in this regard, as it seemed be trending one direction, with plenty WW3 rhetoric coming from many quarters.
By the time the end of the week came (if reports are to be believed), it appears that Chechen and Syrian forces were coming to assist Putin's military operations. NATO members meanwhile have been sending equipment and funds in support of Ukraine, but have been very wary of getting directly involved, even as Russian forces seemed to be progressively pushing further West.
What is clear, is this is not only a war on the ground and in the air, but an information warfare, where propaganda, false claims and narratives are being pushed from all sides, so that the truth becomes ever more difficult to decipher as to what is actually going on there. But no doubt it will come out in the end.
All the while, the Rand just tread water in an odd passage of trade...
This was amazing considering the global turmoil, and huge uncertainty in other markets - but every market got some respite with Gold slowing down from it's frantic few weeks, but still not showing any sign of stability.
And then in other news:
- The Fed's much anticipated rate decision came this week, but really was just what had been expected for weeks now, as interest rates were pushed up 25bps. The question is whether this is just the first of many, or a temporary measure - and right now, all indications point toward a period of extended rate increases as the Fed's hand is forced. Further guidance was more hawkish than expected as Chair Jerome Powell announced that six more hikes have been pencilled in for 2022. He further stated that the US economy is “very strong” and can handle their campaign of monetary policy tightening. While there has been an attempt to shift all blame to Russia for the economic uncertainty right now (which no-one is swallowing), the fact that there has been so much money printed since the beginning of 2020 is no secret - and the effect of it is unmistakable when we see soaring inflation and the Fed forced to increase rates!
- Locally, a motion of no confidence is being scheduled for Ramaphosa - a term we have not heard since many years ago when a certain Mr Zuma was in power! Despite ATM's threat to take the speaker of the National Assembly to court over her refusal to have a vote of no confidence in President Cyril Ramaphosa done by secret ballot, it's all systems go for the 30 March vote from Parliament's side. We will see what comes of this…
- State of Disaster has been in place locally for almost 2 years, and this last week was announced to be continued for another month to mid-April, which would take it officially past the 2 year mark. Ramaphosa was defiant despite the heated debate in parliament, saying he would not put lives at risk by lifting it...when in fact lives have been put at risk for 2 years by them being in place, stopping persons being able to put food on the table. How much longer will this government overreach and it's life- and business-throttling restrictions continue?
Getting back to the local unit, which we have barely spoken about, there was really not that much to report from the week...
With a peak of R15.18 to the Dollar, and a low of R14.85, this week was another of wait-and-see action, but the Rand did ultimately end in the 'green' against the USD.
The breakout is clearly still coming though, with the market not giving us a clear trend change for some time now.
We all know that you cannot keep the Rand quiet for long!
So standby for action undoubtedly coming soon...
The Week Ahead (21-25 March 2022) |
And so as we head into the second half of the month, it doesn't look like the March madness rollercoaster is likely to slow down!
While these may continue to play second fiddle to geopolitical tensions, there are some triggers in the days ahead with events worth watching:
- US - Fed Chair Powell Speech, Durable Goods, Jobless Claims
- SA - Interest Rate Decision
Once again, Russia/Ukraine conflict and global implications will continue to be in the headlines, as the markets wait to see where all this is heading.
As for the Rand, it has had a good run, but how much longer can this continue?
The next few days are likely to be interesting...
Please 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. No charge. No card. All yours to trial for 14 days.
Look forward to hearing from you.
To your success~
James Paynter
