March 12, 2024

Currency News

MyCURRENCY News | Week 11 2024

MyCURRENCY News | Week 11 2024

What we know

The rand has shown some promising gains over the last week, trading over 2% stronger against the greenback. Markets opened last week at R19.05/USD and immediately began trading stronger, eventually closing the week at R18.67/USD. The question does remain – how much of this movement is reflective of improving economic and other factors in SA, and how much is driven by offshore influences, particularly a weaker dollar. 

The past week was very much dollar-driven, with the only significant news out of South Africa being our GDP growth figures which came in better than previously stated, although still less than forecast and not a figure large enough to imply a significant change in the country’s outlook.

Volatility increased on Wednesday as Fed Chair Jerome Powell took a slightly more dovish approach by stating that the US is likely to cut its interest rates this year, although in true Powell fashion he gave no indication as to when this may occur and stands firm in his view that the main objective would be definitively containing inflation before rate cuts become a reality. 

Markets were left indecisive on Friday as US Non-Farm Payroll figures were released with 275K added to the payroll compared to the forecast 198K. While this should be positive for the dollar, it was countered by the unemployment rate increasing from 3.7% to 3.9%.  While the USD did weaken over the course of last week, leading into Friday’s data releases, the mixed data does continue to leave markets guessing in terms of the short-term USD outlook.

What others say

IB TimesChina caps key political meet with pledges to boost ailing economy

“China’s leaders on Monday wrap up a week-long key conclave at which they admitted more was needed to revive a sluggish economy battered by an ailing housing market, poor domestic demand and record high youth unemployment figures.”

MoneywebHeadwinds and tailwinds

“Underlying growth in the domestic economy has been weak. A look at the causes and whether the picture can change”

WiredBinance’s top Crypto crime investigator is being detained in Nigeria

“Tigran Gambaryan, a former crypto-focused US federal agent, and a second Binance executive, Nadeem Anjarwalla, have been held in Abuja without passports for two weeks.”

What we think

We said last week… “(that) even though the gains were modest, it feels as though it was important to close below the R19.20/USD level again, with the sharp negative sentiment towards the Rand having seemingly subsided.”

Despite the trepidation in looking forward to local elections, the Rand continues to press stronger, and we are now trading comfortably below the R19.00/USD big figure and at the best levels since the start of February. The key economic data this week will be the US CPI release on Tuesday, as it offers an indication of how the US is managing inflation, and whether we are edging closer to an interest rate cut that should see the USD start to cool off further. 

Have a good week! 

Our range for the week: R18.50/USD – R18.85/USD.

Have a great week ahead.