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Zawya
3 days ago
- Business
- Zawya
South African rand holds gains after SARB focuses on lower inflation target
JOHANNESBURG - The South African rand held most of the previous day's gains in early trade on Friday, after the central bank stressed its strong preference for a lower inflation target at a monetary policy announcement. The South African Reserve Bank (SARB) presented detailed modelling of the impact of a 3% inflation target, compared to the 4.5% level it aims for at the midpoint of its current 3% to 6% target range. The SARB, which resumed interest rate cuts on Thursday after a pause in March, added that its Monetary Policy Committee felt a 3% target was "more attractive" and said it would continue to consider scenarios based on that target at future rate meetings. "Investors focused on the implications of a lower target, namely lower inflation, reduced interest rates, bond market inflows, and stronger long-term growth, which further support the rand," ETM Analytics said. Other factors that point to more rand resilience include a solid trade surplus, tight credit cycle and signs of prudence in government finances, the research firm added in a note. At 0650 GMT, the rand traded at 17.8425 against the dollar , about 0.1% weaker than Thursday's closing level. Weighing against the rand was a stronger dollar on global markets. The benchmark 2035 government bond was stronger in early deals, as the yield fell 4 basis points to 10.13%.
Reuters
3 days ago
- Business
- Reuters
South African rand holds gains after SARB focuses on lower inflation target
JOHANNESBURG, May 30 (Reuters) - The South African rand held most of the previous day's gains in early trade on Friday, after the central bank stressed its strong preference for a lower inflation target at a monetary policy announcement. The South African Reserve Bank (SARB) presented detailed modelling of the impact of a 3% inflation target, compared to the 4.5% level it aims for at the midpoint of its current 3% to 6% target range. The SARB, which resumed interest rate cuts on Thursday after a pause in March, added that its Monetary Policy Committee felt a 3% target was "more attractive" and said it would continue to consider scenarios based on that target at future rate meetings. "Investors focused on the implications of a lower target, namely lower inflation, reduced interest rates, bond market inflows, and stronger long-term growth, which further support the rand," ETM Analytics said. Other factors that point to more rand resilience include a solid trade surplus, tight credit cycle and signs of prudence in government finances, the research firm added in a note. At 0650 GMT, the rand traded at 17.8425 against the dollar , about 0.1% weaker than Thursday's closing level. Weighing against the rand was a stronger dollar on global markets . The benchmark 2035 government bond was stronger in early deals, as the yield fell 4 basis points to 10.13%.
Reuters
17-04-2025
- Business
- Reuters
South African rand weaker as markets await tariff, local government news
JOHANNESBURG, April 17 (Reuters) - South Africa's rand weakened early on Thursday against a firmer dollar, as markets awaited information on U.S. tariffs and local investors looked for news on the future of the coalition government. At 0635 GMT, the rand traded at 18.8550 against the U.S. dollar , about 0.2% weaker than its previous close. The dollar last traded about 0.3% stronger against a basket of currencies. "Ahead of the Easter long weekend, investors will be reluctant to take on any significant market position. There are so many daily changes that doing so would be risky," ETM Analytics said in a research note. U.S. President Donald Trump met with Japanese officials on Wednesday, in one of the first rounds of face-to-face talks since his tariffs on most countries roiled markets and stoked recession fears. Markets were also processing comments from Federal Reserve Chair Jerome Powell, who warned of the risk of slowing growth and rising prices due to tariffs. Like other risk-sensitive currencies, the rand takes direction from global drivers such as U.S. economic policy in addition to domestic factors. Local investors will eye developments around a budget stand-off between the two biggest parties in the coalition government, the African National Congress (ANC) and the Democratic Alliance (DA), over a proposed value-added tax (VAT) hike on May 1. The pro-business DA voted against the budget's fiscal framework in parliament and is challenging the VAT hike in court, raising concerns among investors over the stability of the coalition government. "All of (South Africa's) domestic political developments are not taking place in isolation. On the contrary, if left unresolved, they may compound an already uncertain international environment," ETM Analytics said. "The ZAR is therefore expected to trade cautiously with one eye on local developments and the other on the performance of the USD." South Africa's benchmark 2030 government bond was firmer in early deals, with the yield down 2 basis points to 9.16%.
Reuters
09-04-2025
- Business
- Reuters
South African rand near record low on tariff war, coalition friction
JOHANNESBURG, April 9 (Reuters) - The South African rand traded near an all-time low against the dollar on Wednesday, bruised by global risk aversion linked to U.S. President Donald Trump's tariffs and uncertainty over the future of the country's ruling coalition. The rand fell as low as 19.83 to the dollar in choppy trade, not far from the weakest it has ever traded at 19.9075 in June 2023 . The Reuters Tariff Watch newsletter is your daily guide to the latest global trade and tariff news. Sign up here. At 1305 GMT it was at 19.8050, down 0.2% on the day and more than 3% weaker so far this week. "The past few trading sessions have been a wild ride, and there are no indications as yet that the volatility is about to end," said Danny Greeff, co-head of Africa at ETM Analytics. The South African currency is highly susceptible to shifts in financial market sentiment, which has soured badly over Trump's global tariff war. U.S. tariffs on dozens of countries kicked in on Wednesday, while China was hit with 104% duties. China said it will impose 84% tariffs on U.S. goods from Thursday, up from the 34% previously announced. Another important factor behind the rand's recent slide is local politics, which some analysts think has outweighed global developments. The two biggest parties in the broad coalition government have disagreed sharply over the budget, with the junior partner voting against it in parliament and going to court. Despite both parties saying on Tuesday that they are not yet walking away from the Government of National Unity (GNU), investors are still worried at the prospect that the pro-business Democratic Alliance could exit government. "Optimism around the GNU's ability to implement much-needed reforms is fading quickly. That being said, as more time passes with the coalition still intact, the market may begin to view current trading levels as attractive," said Greeff at ETM Analytics. On the Johannesburg Stock Exchange, the Top-40 index (.JTOPI), opens new tab last traded down 1.8%. The benchmark 2030 government bond also dropped, as the yield rose 10.5 basis points to 9.305%.
Reuters
28-03-2025
- Business
- Reuters
South African rand strengthens, Trump tariff worries linger
JOHANNESBURG, March 28 (Reuters) - South Africa's rand traded stronger early on Friday, capitalising on recent dollar weakness as concerns over U.S. President Donald Trump's tariffs linger. At 0745 GMT, the rand traded at 18.1925 against the dollar , about 0.3% firmer than its previous close. here. Domestic investors are waiting to see the latest budget balance data due on Friday to gauge the health of Africa's most industrialised economy, amid local budget disputes and caution after Trump's announcement of tariffs on automotive imports to take effect from midnight on April 3. "Should news break that the (coalition government) has made meaningful progress in settling on a budget, the positive sentiment might trigger an even more powerful surge in the ZAR and help it end the week below 18.20/dlr," said ETM Analytics in a research note. On the stock market, the Top-40 (.JTOPI), opens new tab index was last up 0.6%. South Africa's benchmark 2030 government bond was stronger in early deals, with the yield down 7 basis points to 9.08%.
