RAND SLIPS ON NCCC MOVES

THE RAND reversed its gains against the dollar yesterday as concerns grew that the possible introduction of localised Covid-19 lockdowns might undermine economic recovery.

The National Coronavirus Command Council (NCCC) is expected to announce a curfew, alcohol restrictions and a reduction in the number of people in public gatherings in areas deemed Covid-19 hotspots.

The rand had weakened by about 0.39 percent to R15.38 against the greenback by 3pm yesterday.

South Africa’s economy is expected to rebound to near pre-pandemic levels in the third quarter following the resumption of activity after growth shrunk by an annualised 51 percent in the second quarter on Covid-19 hard lockdown.

The rand has seen substantial gains this year from its historical weak point of R19.20 against the greenback in April, reaching R15.11 by November as most emerging market currencies experienced unprecedented weakness.

Anchor Capital’s Nolan Wapenaar said the rand was now now struggling largely because the dollar was on the front foot after the market had been trading with the expectation of a weaker dollar for a while.

Wapenaar said the currency and markets were still focused on global developments and the domestic events were getting little attention.

The rand even ignored the news that Britain, one of South Africa’s key trading partners, had approved the Pfizer-BioNTech Covid-19 vaccine for use that will be rolled out from next week.

FXTM’s Lukman Otunuga said that global risk sentiment remained muted despite the UK becoming the first country in the world to approve a Covid-19 vaccine.

Otunuga said the repeated rand weakness could result in a move back towards R15.50.