Rand firmer on domestic data, JSE lower
THE RAND opened with its best foot forward yesterday with all eyes on the release of South Africa’s manufacturing production and mining figures for May.
Manufacturing production rose by 2.3 percent year-on-year in May, after lifting moderately by 1 percent in April, while mining production continued its downward trajectory dropping for the third consecutive month by 2.6 percent year-on-year.
Corporate treasury manager at Peregrine Treasury Solutions, Bianca Botes, said while fundamentals and economic data still mattered in the currency market, the effects of the US/China trade war and tariffs were felt mostly by lagging economies such as South Africa.
“Although many agree that the rand is currently oversold, one cannot merely use that assumption to predict its trend and movements. In such situations, politics dominates the environment,” she said.
At 5pm yesterday, the rand bid 10c stronger than Wednesday’s same time bid at R13.33 to the dollar. Against the pound, the local unit was 17c firmer at R17.63 and to the euro, the currency rallied 16c to R15.58.
Senior currency dealer at TreasuryOne, Andre Botha, said there was still some risk-appetite out there for risky assets.
“Should the latest trade war drama play out, we can expect the rand to start driving lower, but for the moment expect the rand to trade within ranges as we await news from abroad.
“Usually, emerging markets are joined at the hip and with bad news flooding out of Turkey, we would have expected some contagion effect seeping into the South African market. The fact that this is not the case confirms that the market is looking at the Lira issue as country specific and not as a broad-based emerging problem,” said Botha.
The lira reached its weakest rate ever rate against the greenback yesterday.
Meanwhile, JSE stocks retreated with the blue chip Top40 index sinking 0.73 percent to 50 672.38 points, while the broader all share index gave up 0.67 percent to 56 849.36 points.
Among major losers were Intu Properties, which dropped 5.24 percent to R31.30 and Sibanye, which declined 4.48 percent to end the session at R7.68.