Latest news with #R18.00
IOL News
19-05-2025
- Business
- IOL News
Rand could drop to R17. 75 against the dollar, but maybe not because of Ramaphosa's US trip
President Cyril Ramaphosa. Image: GCIS The rand is set to drop further in the coming days after breaking R18 to the dollar briefly on Friday thanks to expectations that a National Budget will finally be passed on Wednesday. The rand briefly settled at around the R18.03 to R18.05 range by early afternoon, having opened at R18.01. Old Mutual chief economist, Johann Els, said that he wasn't surprised that the rand broke through R18. 'The rand actually spent most of September and October last year below R18, in other words with a 17 handle, at one stage even going as strong as R17.11 late September last year,' he said. Investec chief economist, Annabel Bishop, said the currency continues to 'attempt to break through the R18.00 mark, a major resistance level,' after reaching R17.99 on Friday. She said that, should the inflation target be dropped, the currency will have more strength. Consumer Price Index data is due out on the same day as National Budget 3.0, with an announcement from the South African Reserve Bank (SARB) to be made the following Thursday. Els said markets are likely focusing on a better growth outlook given that CPI will likely come in lower than the current figure, potentially 2.5%, which should result in interest rate cuts. 'Markets are anticipating the announcement of a new inflation target, with the range currently 3% to 6% year-on-year and the midpoint of 4.5% year-on-year. National Treasury is likely to prefer a gradual descent, as opposed to the SARB's preference of close to 3% year-on-year,' Bishop said. Kganyago has been publicly suggesting that the target band will be shrunk for some time, which can only be done if National Treasury implements the necessary policies. Bishop added that Finance Minister Godongwana has previously asked National Treasury and SARB to determine the full impact on consumers and the economy first before any changes are made to the inflation target. 'The announcement could come as early as this week, on Wednesday,' said Bishop. 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 ✕ Ad Loading The rand's performance is not just a number; it reflects the broader economic sentiment and the prevailing uncertainties within South Africa's financial landscape Image: Morningstar Bishop noted that National Treasury has said that 'South Africa's inflation target is out of sync'. A modest revision to between 3% and 5% year-on-year with a midpoint would probably be preferable for National Treasury,' said Bishop. She added that SARB has previously indicated it would like a target of 2%. Inflation is currently at 2.7%. Nolan Wapenaar, co-chief investment officer at Anchor Capital, said the local currency dropping below R17 to the dollar and then gaining again is not due to President Cyril Ramaphosa's trip to the US this week. He added that it's more a case of it has been on a recovery trend since the climb down from 'Liberation Day' and the expectation that South Africa will finally be able to pass a budget. Els, however, said the local currency could strengthen if the visit resulted in a positive trade deal. Global trade risks have eased quite substantially since 'Liberation Day' tariffs were announced early in April, 'with the Trump administration realising that it's perhaps not the best way to go,' said Els. The markets immediately and adversely reacted to the news of the April 2 tariffs, and US President Donald Trump has since put extreme rates on hold and started with trade deals with China, UK and others. Wapenaar said that Anchor Capital maintained its view that the currency will strengthen toward R17.75 in coming days. 'I think a R17 handle is not impossible going forward over the next few weeks if we continue to see improvement in South Africa's economic growth, if we continue to see less fiscal risk, and the political side risks easing with the continuation of the Government of National Unity,' said Els. IOL
IOL News
19-05-2025
- Business
- IOL News
Rand could drop to R17. 75 against the dollar, but maybe not because of Ramaphosa's US trip
President Cyril Ramaphosa. Image: GCIS The rand is set to drop further in the coming days after breaking R18 to the dollar briefly on Friday thanks to expectations that a National Budget will finally be passed on Wednesday. The rand briefly settled at around the R18.03 to R18.05 range by early afternoon, having opened at R18.01. Old Mutual chief economist, Johann Els, said that he wasn't surprised that the rand broke through R18. 'The rand actually spent most of September and October last year below R18, in other words with a 17 handle, at one stage even going as strong as R17.11 late September last year,' he said. Investec chief economist, Annabel Bishop, said the currency continues to 'attempt to break through the R18.00 mark, a major resistance level,' after reaching R17.99 on Friday. She said that, should the inflation target be dropped, the currency will have more strength. Consumer Price Index data is due out on the same day as National Budget 3.0, with an announcement from the South African Reserve Bank (SARB) to be made the following Thursday. Els said markets are likely focusing on a better growth outlook given that CPI will likely come in lower than the current figure, potentially 2.5%, which should result in interest rate cuts. 'Markets are anticipating the announcement of a new inflation target, with the range currently 3% to 6% year-on-year and the midpoint of 4.5% year-on-year. National Treasury is likely to prefer a gradual descent, as opposed to the SARB's preference of close to 3% year-on-year,' Bishop said. Kganyago has been publicly suggesting that the target band will be shrunk for some time, which can only be done if National Treasury implements the necessary policies. Bishop added that Finance Minister Godongwana has previously asked National Treasury and SARB to determine the full impact on consumers and the economy first before any changes are made to the inflation target. 'The announcement could come as early as this week, on Wednesday,' said Bishop. The rand's performance is not just a number; it reflects the broader economic sentiment and the prevailing uncertainties within South Africa's financial landscape Image: Morningstar Bishop noted that National Treasury has said that 'South Africa's inflation target is out of sync'. A modest revision to between 3% and 5% year-on-year with a midpoint would probably be preferable for National Treasury,' said Bishop. She added that SARB has previously indicated it would like a target of 2%. Inflation is currently at 2.7%. Nolan Wapenaar, co-chief investment officer at Anchor Capital, said the local currency dropping below R17 to the dollar and then gaining again is not due to President Cyril Ramaphosa's trip to the US this week. He added that it's more a case of it has been on a recovery trend since the climb down from 'Liberation Day' and the expectation that South Africa will finally be able to pass a budget. Els, however, said the local currency could strengthen if the visit resulted in a positive trade deal. Global trade risks have eased quite substantially since 'Liberation Day' tariffs were announced early in April, 'with the Trump administration realising that it's perhaps not the best way to go,' said Els. The markets immediately and adversely reacted to the news of the April 2 tariffs, and US President Donald Trump has since put extreme rates on hold and started with trade deals with China, UK and others. Wapenaar said that Anchor Capital maintained its view that the currency will strengthen toward R17.75 in coming days. 'I think a R17 handle is not impossible going forward over the next few weeks if we continue to see improvement in South Africa's economic growth, if we continue to see less fiscal risk, and the political side risks easing with the continuation of the Government of National Unity,' said Els. IOL
IOL News
06-05-2025
- Business
- IOL News
Rand strengthens as US interest rate decision looms
The local currency is gaining ground on the dollar as market watchers keenly await the outcome of the United States' Federal Reserve interest rate decision on Wednesday. Image: Pixabay The local currency is gaining ground on the dollar as market watchers keenly await the outcome of the United States' Federal Reserve interest rate decision on Wednesday. On Tuesday, around mid-morning, the rand was trading at its lowest level in a month, having dropped to R18.26 from a monthly peak of R19.76 on April 8. This steady positive trend is the result of investor sentiment turning towards riskier assets, Investec chief economist Annabel Bishop said in a recent note. Bishop noted that the rand's movement continues to be dominated by events in the US on the back of weak US data, including a 0.3% year-on-year contraction in that superpower's gross domestic product for the first quarter of the year. The Fed is expected to cut interest rates by 0.25 percentage points at three meetings before year-end, which is positive for the rand, Bishop said. Should the South African Reserve Bank take its cue from the States, consumers locally may also benefit from interest rate cuts. Statistics South Africa is set to release the latest inflation data on May 21, the same day that Budget 3.0 will be tabled. Inflation is currently at 2.7% year-on-year and the Reserve Bank's Monetary Policy Committee will announce its decision on interest rates on May 29, by which time the latest cost of living figures can be considered as part of its thought process. Peter Little, fund manager at Anchor Capital, said that inflation is currently below expectations and there is very little inflationary pressure. The core inflation rate has now spent eight months below the mid-point of the South African Reserve Bank's target inflation range of 3% to 6%, he said. Bishop noted that Investec anticipates that the domestic currency will average R18.60 for the second quarter. However, as financial markets become keener on riskier assets given dollar weakness and general US economic issues on the back of US President Donald Trump's tariff war, the local currency will benefit, she said. Investec expects the currency to subside back towards R18.00 this month and average R16.80 this quarter. 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 ✕ In his weekly note, Old Mutual wealth investment strategist, Izak Odendaal said that 'the rand, meanwhile, behaved exactly as one would expect during an episode of extreme global risk aversion'. 'The rand typically sells off when global investors are jittery and then stabilises and strengthens. It just happened on a very compressed timescale, highlighting once again how difficult it is to time the currency,' Odendaal said. The JSE is also seeing gains, having recovered from a rout at the beginning of last month to end April 'comfortably in positive territory,' said Little. Odendaal added that local equities more than retraced their losses, and the FTSE/JSE All Share Index is at an all-time high of above 90,000 points. 'This is a 20%-plus return over the past year.' Little added that the 'JSE's rally started with easing tariff-related concerns as the US announced a 90-day pause on implementing reciprocal tariffs, allowing countries time to negotiate better trade terms'.
