Rand maintains its resilience

The JSE and the rand rose after the Reserve Bank held the repo rate at a record low and as international investors bet new US President Joe Biden will push for additional fiscal stimulus measures. The rand maintained its resilience below R15/$.

The JSE and the rand rose after the Reserve Bank held interest rates at a record low and as international investors bet new President Joe Biden will push for extra US fiscal stimulus measures.

The rand maintained the resilience that saw it dip below R15/$ late in 2020 after the Bank held its repurchase rate at 3.5% at its first monetary policy meeting of 2021. Governor Lesetja Kganyago said the bank revised its growth forecasts and expected GDP to rise 3.6% in 2021, up from November’s forecast of 3.5%.

“The rand has firmed marginally since the November meeting, but it is still weaker than the Bank’s estimated long-run equilibrium value, with the monetary policy committee [MPC] stressing that pressure on the exchange rate could emanate from the difficult fiscal situation,” Nedbank said in a statement after the MPC meeting.

“The latest decision continues to reflect the Bank’s cautious approach given the amount of stimulus already provided against the backdrop of a highly uncertain environment. The economic outlook has generally improved despite the persistence of Covid-19, but risks remain firmly tilted to the downside.”

The JSE all share firmed 0.1% to 64,174 points. The top 40 edged up 0.2% to 58,969 points, even as Naspers, which accounts for about 21% of the measure’s value, closed unchanged at R3,500 while Prosus, its international internet arm, fell 0.4% to R1,752.97. At 6.03pm, the rand traded at R14.82/$, R18.01/€ and R20.34/£. The dollar weakened against the euro and pound on expectations that Biden would unveil nearly $2-trillion in extra pandemic relief funding, which will include $1,400 payments directly to Americans.

The S&P 500 rose 0.1% to 3,857 points in early New York trade. Gold fell 0.4% to $1,863/oz, while platinum climbed 1.7% to $1,129/oz. Brent crude fell 0.3% to $56.03 a barrel.

The R2030 government bond was little changed, with the yield steady at 8.82%. Bond yields move inversely to their prices.