Rand gains as fears begin to fade
The rand consolidated its position below R15/$ on Tuesday as global markets gained after officials in China said the spread of the coronavirus outbreak is close to being contained, while the local unemployment rate remained steady in the fourth quarter.
The rand gained for a second day and was the best performing among emerging-market currencies tracked by Bloomberg on Tuesday. At 5.48pm, it had strengthened 0.91% to R14.8358/$, 0.87% to R16.1918/€ and 0.67% to R19.2918/£. The euro was flat at $1.0915.
Treasury partner at Peregrine Treasury Solutions Bianca Botes said the rand gained “as markets reacted positively to what seems to be the peak of the coronavirus”.
Botes added that the local unemployment rate remaining at third-quarter 2019 levels in the fourth quarter “was also well received, aiding the pullback” in the rand.
While the unemployment rate “remains dismal, a further deterioration ... has been avoided as SA continues to battle an economy in disarray”.
UNEMPLOYMENT RATE
The unemployment rate in the fourth quarter of 2019 remained unchanged at near record highs of 29.1%, Stats SA’s quarterly labour force survey revealed on Tuesday.
However, it was the first time the rate has not decreased in the fourth quarter since 2008.
The JSE gained on the day, despite the release of disappointing data on manufacturing production, which contracted for the seventh month in December, falling far more than economists expected as SA experienced stage 6 load-shedding for the first time that month.
Factory output decreased by 5.9% year on year in December, while the Bloomberg consensus was for a contraction of 3.9%.
The latest figures come as the country battles load-shedding and declining economic growth prospects, with the IMF and the World Bank expecting the local economy to grow by less than 1% in 2020.
The JSE all share strengthened 0.23% on the day to 56,981.20 points and the top 40 added 0.38%. Industrials rose 0.27% and banks 0.63%, while financials were little changed.
The all share has now gained 2.11% so far this week, while it is down 0.13% for the year.