Latest news with #R19.76
IOL News
12-05-2025
- Business
- IOL News
Rand's remarkable recovery: How US-China trade talks are boosting South Africa's currency
Following a temporary dip due to geopolitical tensions, the rand has rebounded Image: Picture: Henk Kruger/Independent Newspapers South Africa's local currency, long known as one of the most volatile in the world, is on its longest winning streak this year, buoyed by positive signals of a US deal with China that could benefit exports from this country to China. As of Monday early afternoon, the rand was trading at R18.30 after having started the morning off at R18.21. This, based on Morningstar data, is among its best levels this month after it went as low as R18.19 last Tuesday. At the beginning of the year, the currency was at R18.82 and saw a nasty spike around April 8, when it shot up to R19.76 on the back of US Donald Trump's tariff announcement. On Friday, Wichard Cilliers, director and head of market risk at TreasuryONE, said the currency was on its strongest winning streak this year, boosted by expectations that US-China trade talks could benefit global trade and South Africa, whose economy is heavily reliant on exports to China. Investec chief economist, Annabel Bishop on Monday, noted that the currency was, in fact, 'more settled recently,' with the financial institution expecting it to reach as low as R18 to the dollar for the three months to end-June. Bishop noted that the dollar recouped some strength on the back of weekend trade talks between the world's two superpowers. Yet, she cautioned, it could still see volatility. 'Markets have benefited from the US and China reaching a trade deal over the weekend, with reciprocal tariffs reported to fall by 115%, and a 90 day pause on the recent new tariffs, with room for further negotiations,' said Bishop. Trump highlighted the meetings as a 'total reset' in US China trade relations, with other officials noting 'a great deal of productivity' and that 'it's important to understand how quickly we were able to come to an agreement,' Bishop said in a note. Cilliers, however, noted that more details on the trade talks would likely still emerge. Nolan Wapenaar, co-chief investment officer at Anchor Capital, told IOL that terms of trade have turned positive for South Africa as the cost of oil comes down and the value of gold increases. 'As long as this persists, the rand will trade with a positive overhang,' he said. This comes off the back of 'significant weakness in the VAT own goal and the Trump tariffs,' Wapenaar said. 'It appears, for now, that the risks are receding on both fronts. Therefore, we expect some recovery of the early April weakness,' Wapenaar said. These factors, along with South Africa's more positive international trading position, means that the local currency could strengthen toward the high R17s against the dollar. Bishop, however, said that the local currency will be dependent on international events. 'The improvement in market expectations now over global and US economic growth has added to the rand's recent strength, as risk aversion has dropped from elevated levels in earlier weeks, although risks remain to the downside,' Bishop said. 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'.
