Rand stead­ies de­spite rat­tles

Weekend Argus (Sunday Edition) - - SPORT - Ka­belo Khu­malo

THE RAND re­cov­ered slightly on Fri­day fol­low­ing a week of volatil­ity that saw the re­vised Min­ing Char­ter, cur­rent ac­count deficit and Pub­lic Pro­tec­tor Bu­sisiwe Mkhwe­bane’s chal­lenge to the Re­serve Bank’s pri­mary man­date rat­tling the mar­kets.

By 5pm on Fri­day, the rand was bid at R12.94.

On Wed­nes­day, the cur­rency hit R13.13 in early trade and traded be­low the psy­cho­log­i­cal bar­rier of R13 for the bet­ter part of the week be­fore re­cov­er­ing as the Con­sti­tu­tional Court judg­ment on the se­cret bal­lot gave con­fi­dence in the coun­try’s in­sti­tu­tions.

In­vestec economist Kamilla Ka­plan said the cur­rency took a cue from the de­vel­op­ments that dom­i­nated the coun­try’s pub­lic dis­course

“On Fri­day, the rand stead­ied, aided by a slightly weaker dol­lar and mar­ket re­lief over the SA Con­sti­tu­tional Court rul­ing that the vote of no-con­fi­dence against the pres­i­dent may be held in a se­cret bal­lot,” Ka­plan said.

Mkhwe­bane sent the rand into a tail­spin on Mon­day when she rec­om­mended that Par­lia­ment should change the con­sti­tu­tion in or­der to re­fo­cus the SA Re­serve Bank from im­ple­ment­ing mone­tary pol­icy and tar­get­ing in­fla­tion to the so­cio-eco­nomic well-be­ing of the coun­try.

An­a­lysts from Mo­men­tum SP Reid said the rand had man­aged to re­cover from the fall­out.

“Our short-term in­di­ca­tors sug­gested R13.18 as a re­al­is­tic trad­ing tar­get for the rand. How­ever, we also noted that the ‘rel­a­tive per­for­mance’ of the do­mes­tic unit re­mains brisk. Ex­clud­ing the threat of an ad­di­tional down­grade or an unan­tic­i­pated po­lit­i­cal de­vel­op­ment, the over­all tonal­ity for the rand re­mains rel­a­tively firm, clearly negat­ing our short-term view for the moment,” the an­a­lysts said.

Last week also saw a mar­ginal uptick in in­fla­tion while the cur­rent ac­count deficit widened to 2.1 per­cent of GDP in the first quar­ter from 1.7 per­cent in the pre­vi­ous quar­ter.

Mamello Matik­inca, an economist at FNB, said she ex­pected the ac­cel­er­a­tion in in­fla­tion to re­sume in the sec­ond half of next year.

“If in­fla­tion falls more than fore­cast and the rand doesn’t weaken be­yond our pro­jec- tions, in­ter­est rates may well be cut later in the year.

“How­ever, the SARB will have to weigh the im­pact of po­lit­i­cal un­cer­tainty on global sen­ti­ment to­wards South Africa and the rand, and the threat of fur­ther down­grades,” Matik­inca said.

This week the coun­try will await key eco­nomic data to be re­leased with the trade bal­ance, the pro­ducer price in­dex (PPI), pri­vate sec­tor credit ex­ten­sions and the quar­terly em­ploy­ment statis­tics all ex­pected to come out.

Matik­inca said: “Hav­ing re­treated to 4.6 per­cent year on year in April from 5.2 per­cent in March, we ex­pect to see a mod­est tick lower PPI rate for May. Credit ex­ten­sion for May will likely see con­tin­ued eas­ing among house­holds and cor­po­rates, a re­sult of weak credit ap­petite as both cor­po­rates and in­di­vid­u­als lack the con­fi­dence to in­vest.

“We ex­pect a small sur­plus of trade fig­ures for the month as com­mod­ity de­mand re­mains sta­ble, the oil price eased and do­mes­tic de­mand re­mains weak.”

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