March 28, 2023

Currency News

MyCURRENCY News | Week 13 2023

MyCURRENCY News | Week 13 2023

What we know

As if things were not bad enough with the run on Silicon Valley Bank and the resultant immense pressure placed on the US banking sector, Credit Suisse’s own issues came to the fore and created a rather turbulent period internationally, further agitating and spreading global contagion fears. However, calm seems to have been restored globally and the world of emerging markets have regained their footing for the time being. We hope this stability is here to stay and that we’re not just entering the eye of the storm.

Despite the wide trading channel we’ve established since about mid-February, there has been a slight showing of consolidation, though the trend is still relatively new. With the last swing high coming in lower than the previous high that was set at the beginning of March, we will be watching in the coming week to see if we are able to set a lower high for a 2nd consecutive time. This could hopefully lead us to a move back below R18/USD and fetch a R17 handle during April. Well, that’s what the optimist in us says – we will have to wait and see if the stars align. 

What others say

BloombergChina lent heavily to developing nations. Now it’s helping them manage their debt

“In a new study that offers a rare look at how the People’s Bank of China (PBOC) wields its $3.3 trillion arsenal, a group of leading economists document at least $240 billion in assistance that Beijing has funnelled into 22 countries including Argentina, Pakistan and Nigeria since 2000.”

ReutersUS, Japan strike trade deal on electric vehicle battery minerals

“The swiftly negotiated agreement prohibits the two countries from enacting bilateral export restrictions on the minerals most critical for EV batteries, according to senior Biden administration officials. The minerals include lithium, nickel, cobalt, graphite and manganese.”

MoneywebCannabis industry plans for South Africa have stalled

“The opportunity to commercialise the hemp and cannabis industry is that it is a new, fast-growing, multi-billion-dollar sector with local and international markets. The potential legal pharmaceutical market for hemp and cannabis in South Africa alone has been estimated at over R100 billion a year.”

What we think

Last week we said that “With the large swings in the ZAR over the past couple weeks, this leaves the currency open to larger moves still as there are no pre-defined trading channels at present. The ceiling seems to still be at R18.50/USD, with our floor being around R18.10/USD. It’s a wide range and we seem to be yo-yoing between each level with ease.”

Not much has changed since we wrote the above – the USDZAR trading range remains wide with us having brushed the R18.60/USD level early last week before rushing back down to R18.01/USD by the end of Friday. Now, we’re sitting almost perfectly in the middle of the two at R18.28/USD this morning, with a whiff of indecisiveness in the air as the market settles on which way the Rand will be running to next.

With our own interest rate decision due for Thursday afternoon and an expectation for a 0.25% hike, we would hope to see the Rand firm slightly during the week as the market readies for the resultant forward guidance by Governor Kganyago. It will be interesting to see their analysis of the affect of the prior bout of loadshedding and their resultant GDP forecasts.

Elsewhere, the EU has its unemployment and inflation numbers out on Friday in conjunction with several US data points too.

Our range for the week: R18.00/USD – R18.45/USD.

Have a great week ahead.