Rand has worst week since June

The rand ended its worst week in nine on Friday as concerns about economic recovery and fresh virus outbreaks weighed on sentiment. It lost about 4% against the dollar over the week.

The rand ended its worst week in nine on Friday as concerns about economic recovery and fresh virus outbreaks weighed on global sentiment.

Markets took a knock from all sides with no end in sight to the spread of the Delta variant of Covid-19, talk of stimulus tapering in the US and the likelihood of further action by market regulators in China.

On Wednesday, minutes of the US Federal Reserve’s open market committee (FOMC) meeting in July revealed that members had discussed cutting back the monthly bond-buying programme later in 2021.

“The weak emerging-market sentiment has continued following the FOMC minutes and renewed fears that the Delta variant could cause renewed lockdowns, which will slow global growth,” said TreasuryONE currency strategist Andre Cilliers.

“Global growth is critical for emerging markets to thrive, but it feels that the momentum is for emerging markets to continue to remain a little weak in the short term,” Cilliers said.

At 6.05pm, the rand had weakened 0.92% to R15.3346/$, after reaching its worst level in five months on Thursday. It also fell 1.08% to R17.9386/€ and 0.97% to R20.8993/£. The euro was a little firmer at $1.1692.

For the week, the rand lost about 4% against the dollar, its worst performance since the week ended June 13, when SA officially went into its third wave.

The focus shifts to the Jackson Hole symposium this week when US Federal Reserve chair Jerome Powell’s keynote address will be scrutinised for any further indication of when the tapering might begin. Cilliers said he expected the dollar to trade sideways early this week ahead of the symposium.

Retailers and miners led minor losses on the JSE on Friday, with the all share falling 4.86% this week. The all share closed at 66,011 points, its weakest in a month. Retailers fell 2.09% and precious metals 2.7%.

Retailer Mr Price, which sells clothing and homeware to predominantly low- to middle-income consumers, was among the worst performers on the day, despite the group releasing positive news.

The company said on Friday that retail sales and other income surged 51% in the 18 weeks ended August 7, compared with the same period a year ago. Its shares fell the most since October 2020, down 6.5%, to R219.35. tsobol@businesslive.co.za