And welcome to another issue of your favourite Weekly Rand Review...

What a week it has been for the Rand, as it showed remarkable resilience amid global data releases, global tensions and domestic political developments...

...and in so doing, managed to break through R18 to the Dollar, hitting levels seen 11 months ago!

Let's dive into the highlights and see how things shaped the Rand's movements.

Key Moments (17-21 June 2024):

In some major headlines over the last five days:

• GNU Sentiment Boost: The market seemed to take courage by recent marriage of convenience by ANC & DA...but how long will it last
• US Data Disappoints: Consumers are feeling the pinch as Retail Sales slump
• Geopolitical Tensions Deepen: A visit by Putin to North Korea and Vietnam, and China-Taiwan rhetoric exacerbate already-tense global situation

The Rand started the week at R18.35/USD, its strongest in several weeks after a superb pullback against the greenback the previous week...

...but could it capitalise on the momentum created?

Of course, this came off the back of the major shift on the political scene, with a most unlikely teaming up between the ANC, DA and IFP to for a government of national unity...

...which created some improved sentiment towards South Africa and the Rand with the hope that things might turn around now that the ANC no longer have a majority.

Anyway, the week kicked off with a public holiday, which maybe meant a quiet start to the week?

Or maybe not..

After tracking sideways, the local unit tested R18.40/$ after the SA trading desk opened, but then then turned things around sharply, as the USD/ZAR market dropped almost 20 cents over the next three hours!

Then came a bounce of 10 cents, but the Rand managed to hold on to the advantage, ending the day at 18.22 ZAR/USD in after-hours trade.

Tuesday saw the Rand again give back some ground in early trade, as it tested the higher R18.20s...

...but again, the Rand managed to turn things around quickly during the SA session, as it beat off the attempted Dollar fightback - with aplomb!

It was one-way street from then throughout the SA trading session and beyond, as the market came within a couple of cents of the R18 barrier - and then managed to hold out for the balance of the session.

The Dollar was not helped of course by US Retail Sales coming in at just 0.1% MoM after the previous month's downward revised 0.2% drop - both well below expectations.

Not a good sign when consumers stop spending!

But as for the Rand...

And Wednesday saw the local unit drive home the advantage...

Buoyed by some stability in South Africa's core CPI data, the USD/ZAR dropped still lower, breaking below R18/US$ for the first time in 11 months...

...and despite some fightback from the US dollar, the Rand managed to double down and push even lower, testing R17.90/$ before ending the day a couple of cents weaker.

Then, in other news, it seems the geopolitical tensions internationally are not abating anytime soon:

• Russian President Putin visited both North Korea and Vietnam and signed strategic agreements with them both, and hinted at arming North Korea with Russian weaponry in retaliation for the US arming Ukraine.
• China also seems to be upping the ante with Taiwan, as it announced new punishments, including the death penalty, for what it considers to be 'Taiwan independence' diehard activities'. Taiwan said it deeply regretted China's new guidelines.

Some interesting days lie ahead...

Getting back to the Rand..

...Thursday dawned with the USD/ZAR below R17.95 and immediately was on the back foot, losing ground throughout the morning to test R18.15/US$...

...but just when it seemed the Rand had no fight left, it bounced back, and pushed the market all the way back in the afternoon and after-hours trade to close out the day around R17.95/$.

But the Rand show of strength was not over, as it pushed even lower on Friday to hit R17.87 to the dollar before closing out the day and week about 10c weaker...

...overall, another robust weekly performance from the South African currency, which was all the more impressive considering the Dollar Index had itself strengthened during these same past two weeks!

Not too shabby!

The Week Ahead (24-28 June 2024)

So another doozy of a week behind us, and we already into the last week of June - can you believe it?

And it seems things are only getting hotter internationally, as Monday dawned with global tensions pushing up a notch, with Russia blaming the US for a weekend Ukraine missile strike in Crimea that killed and injured civilians on a beach, and vowed there would be consequences. Things seem to be ramping up...

Apart from keeping eyes on these international events, there are several economic events that could provide some potential triggers:

• SA: Quarterly Bulletin, PPI, Trade Balance
• US: New Home Sales, GDP, Durable Goods Order
• UK: GDP

So where to next?

Well, the Rand has really had a fortnight of good fortune, but our forecasting modelling is showing that it may just be running out of steam...

...so be prepared for some surprises in the days and weeks ahead.

Until next week!

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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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