Rand breaks four-day losing streak

The rand broke a four-day losing streak on Monday, easing off record lows as concern about SA-US relations eased and sentiment improved.

The currency gained more than 1.5% in intraday trade, touching a session best of R18.9898/$ on reports that Washington and Pretoria are working on patching up diplomatic relations after last week ’ s accusations that SA provided weapons to Russia.

President Cyril Ramaphosa insists SA is not taking sides in the Ukraine war. Finance minister Enoch Godongwana says “actions were taken in order to ensure that our relationship with the US remains and that relationship should be normal and cordial”.

The rand was also under pressure amid fear of heightened Eskom power cuts and a grid collapse as winter approaches. “The rand regained a bit of ground, with risk aversion towards SA subsiding somewhat as SA looks to emergency power provision,” said Investec chief economist Annabel Bishop. “President Ramaphosa and electricity minister Kgosientsho Ramokgopa stated support for Karpowership’s emergency supply at the end of last week, boosting domestic sentiment as concerns about higher load-shedding stages grow.”

Markets have been jittery in prolonged uncertainty about global growth, inflation and interest rates, said Bishop. “While sanctions are not anticipated for SA, the country needs to show, and now likely prove, its neutrality. A further improvement in global financial market sentiment could see the rand move below the key resistance level of R19.00/$.”

At 6.05pm, the rand was up 1.46% at R19.0444/$, 1.26% at R20.7085/€ and 0.74% at R23.8524/£. The euro was 0.23% firmer at $1.0872.

Investors are keeping a close eye on US debt-ceiling negotiations. At the weekend, US President Joe Biden maintained his optimistic stance that Democrats and Republicans could agree to raise the US debt limit and avoid a default. Bloomberg reports that US treasury secretary Janet Yellen hinted that the US would avoid a default, saying “negotiations are very active and some areas of agreement have been found”. Oanda senior market analyst Edward Moya said: “Until we have Republicans and Democrats move a little on tax increases, increasing the debt ceiling or federal spending, any optimism is premature.”

The JSE all share at 78,261 points and the top 40 indices were little changed. Retailers lost 1.73%. The precious metals and mining index eased 0.71%, resources 0.34%, financials 0.24% and banks 0.19%.

At 6.05pm, the Dow Jones industrial average was 0.1% weaker , while European markets were also generally unchanged.