No respite for the battered rand

With bad news coming from all sides the rand has taken a pounding of late as the prospect of lower interest rates any time soon fades.

While off its worst levels of the day, at 6pm on Monday it had weakened 0.2% to R19.1421/$, 0.12% to R20.3794/€ and 0.1% to R23.6289/£. The euro was marginally weaker at $1.0647.

“The rand remained around R19/$ over the course of last week, after the US saw a week of data which did not dissuade financial markets from their view that the US will only begin cutting its interest rates in the fourth quarter,” Investec chief economist

Annabel Bishop said in a note. The dollar has been given a boost

as a result of the likely delay in the cutting of rates in the US, while geopolitical tensions in the Middle East and Russia-Ukraine are driving it up further. At the start of the year, analysts were predicting total cuts of 150 basis points in the US for 2024, but these bets have been tempered as US inflation remains sticky.

The war in Gaza, and the potential for it to explode into the rest of the Middle East, has seen oil prices rise nearly 13% this year, which feeds into the higher inflation rates that analysts believed would have come down substantially more than they have.

“The rand has historically strengthened during US interest rate cut cycles, along with other emergingmarket currencies, and the ongoing delays in the advent of the US rate cut cycle has caused the domestic currency to track somewhat weaker in response,” Bishop said.

The JSE all share managed to eke out a gain of 0.26% to 73,551 points on Monday, with industrials leading the gains while mining stocks took a beating.

The top 40 ended the day up 0.27%, while precious metals and miners tumbled 5.12%, resources 3.71% and industrial metals and miners 1.59%.

Gold was last seen down 2.5% at $2,332.27/oz and platinum fell 1.48% to $921.68/oz. Brent crude added 0.25% to $86.75 a barrel.