January 09, 2023
MyCURRENCY News | Week 2 2023
What we know
The holiday break proved to be a bit of a wild ride for the ZAR, though there’s nothing shocking about that anymore. What was surprising though, was the Rand’s resilience through it all, staging one come back after another despite the ZAR’s habitual tendency to climb sharply higher on a whim. Sadly, there’s a glass floor that has formed just below the R17.00/USD level that has halted any ZAR momentum when on the run lower.
The last offensive against the ZAR was on Friday following on from comments by Gwede Mantashe calling for a broadening of the SARB’s mandate “to meet the needs of the economy”. This was met by a swift depreciation of the ZAR of almost 2%. We can only think that this was a reflex move and sounder judgement has written off the comments by the ANC as cheap political posturing as we enter the new year. The ANC requires a 2/3 majority to have the constitution amended, and hence to amend the SARB’s mandate. So, we will have to wait and see how this all plays out in the near future and how brashly the ANC pursues this point.
What others say
Bloomberg – Brazil capital reels from anti-Lula rioters who stormed congress
“Brazil’s capital was recovering early Monday from an insurrection by thousands of supporters of ex-President President Jair Bolsonaro who stormed the country’s top government institutions, leaving a trail of destruction and testing the leadership of Luiz Inacio Lula da Silva just a week after he took office.”
“The markets in 2022 were characterized by a lot more pain than gain. In the U.S., the Fed hiked interest rates seven times. Globally, central banks raised interest rates for the first time in years in order to combat surging inflation. The Russian invasion of Ukraine and China’s COVID Zero ambitions threw markets and supply chains into further disarray.”
Daily Maverick – Attempted murder of departing Eskom CEO Andre De Ruyter reported to SAPS
“De Ruyter has confirmed the alleged attempt on his life, which took place on Tuesday 13 December 2022, a day after he submitted his resignation as CEO to the Eskom chairman, Mpho Makwana, but before this became publicly known on 14 December 2022.”
Moneyweb – These four charts show the Eskom crisis is just beginning
“In 2021, the percentage of breakdowns across Eskom’s generating fleet exceeded 30% (on average) in just one week of the year. Last year, that number was 24 weeks, and it exceeded 35% in two of those. It ought to be no surprise that 2022 was a record year for load shedding.”
What we think
In our last opinion piece on the 20th of December, we said that “we expect things to cool down somewhat and for us to trade in a more traditional manner and in a slightly tighter channel. The next key data event will be on Friday the 6th of January when the US releases its Non Farm Payrolls (NFP).”
Overall, things did slow down as we entered the final stretch of 2022 and most sharp movements struggled to gain any notable traction with liquidity being thin on the ground. Although Gwede Mantashe’s comments caught the market by surprise, the US NFP numbers were nothing to write home about leading to the USD to suffer on all fronts. Fortunately, this gave the ZAR enough strength to close the day out flat at R17.18/USD.
The USD weakness has continued into this week with the EURUSD and Dollar Index (DXY) showing the Dollar to be on the back foot – this sees us flirting once again with the R17.00/USD level. With a lack of data events until this Thursday, there may be a chance for the USDZAR to re-test the R16.80/USD level. Thursday sees US inflation number released which will guide markets into the new year.
Our range for the week: R16.85/USD – R17.30/USD.
Have a great week ahead.