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IOL News
a day ago
- Business
- IOL News
How the Rand's pressure mounts ahead of key interest rate decision and US trade deadline
The rand is under pressure, hovering at R17.90 against the dollar. Image: Armand Hough /Independent Newspapers The South African Reserve Bank's interest rate decision on Thursday comes at a critical moment, just one day before South Africa's deadline to secure a trade deal with the US expires. Failure to reach an agreement could add 30% to the cost of exports to America, threatening thousands of jobs and weighing on economic growth, while the rand trades weaker near R17.90 against the dollar amid mounting uncertainty. Andre Cilliers, currency strategist at TreasuryONE, added that the rand is trading weaker around the R17.90 level as the rally in the dollar and the lack of any good news on the tariff front ahead of Friday's deadline weigh on the local currency. In Investec chief economist Annabel Bishop's weaky rand note, she said that the pending deadline to strike a deal with the US – with South Africa seemingly have not made progress – would be negative for the local currency. The trade tax order, signed by US President Donald Trump on July 7, follows a suspension of his April 2 'Liberation Day' tariffs, which he placed on pause following an extremely negative market reaction in America. The rand is hedgy ahead of the interest rate announcement and the Trump trade deadline. Image: Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Advertisement Next Stay Close ✕ The US dollar has risen on the optimism around the progress ahead of the deadline on Friday, which the US's Commerce Secretary Lutnick said will not be extended, and countries which have not struck deals will see July's reciprocal tariffs apply, said Bishop. Nolan Wapenaar, co-chief investment officer at Anchor Capital, said It seems certain that South Africa isn't going to have a deal with the US by Friday. 'I expect that everyone is aware of this by now and there I don't expect a massive impact as we move into August,' he noted. More likely the loss of export revenue will weight on the trade balance adding negative pressure to the rand over time, said Wapenaar. 'Most industries won't really notice, while a handful of sectors, like auto manufacture, will suffer a significant impact,' he said. Wapenaar added that this will translate into job losses and economic losses in a few sectors. 'Economists are all modelling to estimate the impact and, from what I am seeing, this will shave about 0.7% off economic growth. Just not nice,' he said. In 2023, South African exports to the US accounted for around 2.2% of gross domestic product, while around 426,000 of jobs are linked to exports to the US. On the back of both the US Federal Reserve and the South African Reserve Bank announcements on interest rates this week, TreasuryONE expects the rand to remain vulnerable to dollar moves. 'However, a break above the R18.00 is likely to attract exporter inflows,' he said. Bishop also noted that the local currency had weakened on a likely interest rate cut in this week. IOL
Reuters
21-07-2025
- Business
- Reuters
South African rand flat with inflation the week's main focus
JOHANNESBURG, July 21 (Reuters) - The South African rand held steady in early trade on Monday, with the main focus this week on inflation data that will influence the central bank's thinking on interest rates. At 0740 GMT the rand traded at 17.7075 against the dollar , unchanged from Friday's close. Statistics South Africa will release June inflation data on Wednesday, with analysts polled by Reuters expecting a modest rise to 3% year on year from 2.8% in May (ZACPIY=ECI), opens new tab. "A softer print could open the door for one last rate cut this year, while a firmer number would push that possibility further out," said Andre Cilliers, currency strategist at TreasuryONE. The South African Reserve Bank's next interest rate announcement is on July 31. The bank cut its repo rate by 25 basis points at its last meeting in May (ZAREPO=ECI), opens new tab, with inflation below its 3%-6% target range. The Johannesburg Stock Exchange's Top-40 index (.JTOPI), opens new tab was up about 0.4% in early trade. The benchmark 2035 government bond was little changed in early deals, with the yield at 9.935%.
Reuters
23-06-2025
- Business
- Reuters
South African rand weakens as spike in oil prices weighs
JOHANNESBURG, June 23 (Reuters) - The South African rand weakened in early trade on Monday, pressured by the rise in crude oil prices and risk-off sentiment following the U.S. military action against Iran over the weekend. At 0659 GMT the rand traded at 18.08 against the dollar , down roughly 0.4% from Friday's close. The greenback edged up against a basket of currencies on heightened safe-haven demand, while oil prices rose about 1.4% as investors anxiously awaited Iran's response. Market participants are bracing for further oil price hikes amid fears that an Iranian retaliation may include the closure of the Strait of Hormuz, through which roughly a fifth of global crude supply flows. South Africa's economic calendar will be relatively quiet on Monday and "market moves will be driven by geopolitical events," said Andre Cilliers, Currency Strategist at TreasuryONE. "Prices are likely to remain fairly volatile in the short term as traders await Iran's response to the U.S. attacks," said Cilliers. Domestically, investors will look to leading indicator (ZALEAD=ECI), opens new tab and producer inflation (ZAPPIY=ECI), opens new tab data due on Tuesday and Thursday respectively to gauge the health of Africa's most industrialised economy. South Africa's benchmark 2035 government bond was weaker in early deals, as the yield rose 2.5 basis points to 10.075%.
IOL News
19-06-2025
- Business
- IOL News
South Africans face currency shock as rand stays stagnant against US dollar
Many South Africans were hopeful that their local currency would mirror this decline, allowing them to capitalise on the weakening greenback Image: Armand Hough/Independent Media South Africans who expected to score massively from the fact that the greenback has lost 10% against every other major currency this year are set for a sore surprise because the rand has barely budged against the dollar year-on-year. In fact, investors would have been better off putting R10,000 into pounds or even euros, with euros having provided the best return of R555.67 – or 5.6% year-on-year, IOL's calculations show. Based on a linear equation that doesn't include transaction costs, fees, or reinvestment of gains, the pound would have provided a return of R405.12, or 4.1%. While the rand had been gaining against the US currency given the greenback's weakness, the exchange rate went over R18 to the dollar again this week – effectively on par with a year ago. As a result, a R10,000 investment into the dollar would provide a negative return. Andre Cilliers, currency strategist at TreasuryONE, explained that the rand had lost ground as the dollar firmed and there was uncertainty over any US military action against Iran, which is keeping the local currency on the back foot for now. US President Donald Trump has variously indicated he would support Isreal in its fight against Iran, while also stating that this may not happen. Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Advertisement Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Next Stay Close ✕ Bloomberg data indicated that, since Trump was inaugurated for his second term on January 20, the greenback has declined in value against the euro, pound and Swiss franc. This, it stated, was due to Trump's tariffs and his insistence that Federal Reserve Chaiman Jerome Powell lower interest rates. The Fed voted overnight to keep rates unchanged, the same position for all of 2025 so far. The last time the dollar plunged this much and this fast was in 2010 when the US Federal Reserve pumped more money into the economy to help deal with the ravages of the 2008 Global Financial Crisis, Bloomberg data showed. South Africa's rand is notoriously volatile. IOL
Reuters
18-06-2025
- Business
- Reuters
South African rand edges up before local inflation and retail sales data
JOHANNESBURG, June 18 (Reuters) - The South African rand edged up in early trade on Wednesday ahead of the release of domestic inflation and retail sales data, as investors also awaited an interest rates decision from the U.S. Federal Reserve later in the day. At 0637 GMT, the rand traded at 17.9350 against the dollar , about 0.6% firmer than Tuesday's close. The risk sensitive currency fell more than 1% on Tuesday as hostilities between Israel and Iran led investors towards safe assets, dulling the appeal of the local currency. Although it has showed signs of stabilising, "further gains are likely to be limited until after today's Fed decision," Andre Cilliers, Currency Strategist at TreasuryONE, said. Before that, South Africa-focussed investors will look to the monthly consumer price index data (ZACPIY=ECI), opens new tab due at 0800 GMT and retail sales data (ZARET=ECI), opens new tab two hours later to gauge the health of Africa's most industrialised economy. Economists polled by Reuters estimate inflation to have remained steady 2.8% in May, while retail sales are expected to have increased 3.1% in April. Nedbank economists said in a research note they expect consumer inflation to ease to 2.3% year-on-year in May and forecast a growth of 1.7% in retail sales, saying they would be "supported by the more subdued inflationary environment, lower interest rates and easing debt service costs, which has lifted real wages and discretionary spending". South Africa's benchmark 2035 government bond was little changed in early deals, with the yield down 0.5 basis points to 10.105%.
