Latest news with #R18.60
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'.
IOL News
02-05-2025
- Business
- IOL News
Market welcomes Budget 3. 0 as finally resolving the VAT impasse
Finance Minister Enoch Godongwana has announced the date for the third Budget speech, highlighting the impact of recent VAT discussions and the importance of coalition politics in South Africa. Image: GCIS The local currency is on a roll, dropping below the R18.50 market following the news that National Treasury will have a third stab at the National Budget. Finance Minister Enoch Godongwana on Wednesday said that National Treasury will table Budget 3.0 on May 21. This follows seemingly endless disagreements between political parties over a contentious hike in the VAT rate. On the first day of trading following his pronouncement, the rand had gained from R18.89 on Wednesday's close to R18.45 as of mid-morning on Friday. Although US President Donald Trump's vacillatory position regarding his tariff trade war adds to this improvement, stability in the Government of National Unity contributed much to the increase. The Government of National Unity was on rocky ground following sabre rattling from the coalition's second largest party, the Democratic Alliance, which threatened to leave the multi-party government. Generally, markets react adversely to political uncertainty. The JSE's All Share index was up almost a percent on Friday morning. Investec chief economist, Annabel Bishop, said earlier this week that the currency had moved back to R18.60 against the dollar as per their forecast for the first quarter of the year. This follows it hitting R19.93 early last month on fears the DA would exit the government of national unity, which worried investors and financial markets. After the first Budget failed to be passed in February – with a proposed VAT hike from 15% to 17% – it was tabled again in March, being approved by a slim majority. This spending plan was based on a fiscal framework that dropped the proposed increase to 15.5%. However, after some confusion as to whether this included the 0.5 percentage point increase in tax at the till points, the DA and EFF joined forces to have this overturned in the Western Cape High Court.
