May 15, 2023

Currency News

MyCURRENCY News | Week 20 2023

MyCURRENCY News | Week 20 2023

What we know

For an event to leave us at a loss for words is a rare occurrence, and I think the end of last week is one of those blue moon events. Fortunately, we’ve emerged from the weekend and are ready to attempt to breakdown the most recent events. 

We did have a feeling of unease heading into last week based on slightly hawkish statements from Fed members alongside growing fears that Eskom would be pushing us deeper into darkness. Not the end of the world by our own standards, as the rand has fended off much worse news before. However, the ZAR was smacked out of the park on Thursday afternoon as the US Ambassador’s allegations were made public. A prime example of selling on the rumour and buying on the facts. South Africans will be glad to hear that Ramaphosa has lodged an investigation into the matter. If only the government knew who it was and was not selling arms and munitions to in the first place.

Now, we naturally cannot speak to the veracity of these claims – however, where there is smoke, there is usually fire. Even if these claims were without merit, the speed at which the ZAR depreciated is indicative of the market’s perception of South Africa’s relationships with various dubious foreign powers, and it’s clearly not very positive.

What others say

Visual CapitalistWhich jobs will be most impacted by ChatGPT?

“The AI chatbot stunned users with its human-like and thorough responses. ChatGPT could comprehend and answer a variety of different questions, make suggestions, research and write essays and briefs, and even tell jokes (amongst other tasks).  Many of these skills are used by workers in their jobs across the world, which begs the question: which jobs will be transformed, or even replaced, by generative AI in the coming future?”

Daily MaverickGreasing the skids: Karpowership clinches last-minute ‘special directive’ from SA government

“The directive seems to have been shoved through despite strong opposition from the national harbour authority. Until recently, the Transnet National Ports Authority (TNPA) made it clear it opposed any long-term plans to moor powerships in Coega because it had already earmarked limited harbour space for its own port expansion plans. Therefore, there was no room to accommodate three large ships indefinitely.”

BloombergUS won’t sanction South Africa over weapons row, Godongwana says

“A furor erupted on May 11, when US Ambassador to South Africa Reuben Brigety told reporters that armaments were collected by a Russian cargo ship, the Lady R, from the Simon’s Town naval base in Cape Town in December. South Africa’s government denied the accusation and criticised Brigety for going public with it.”

What we think

Last week we said that “We’re not sure this was explicitly covered in Economics 101; however, we’re going to put forward our own economic theory:  The currencies of economies with stable and adequate energy supplies, will outperform those without stable and adequate energy supplies.” 

As we edge further into winter, the probability of receiving more than 12 hours of loadshedding a day grows drastically. It’s old news, but it’s still important to bear in mind as it’s going to affect our growth prospects significantly – JP Morgan Chase is predicting a 0.2% decline, revised down from a positive 0.3% growth number.

Looking forward, we have a number of news events this week that will keep the ZAR on its toes starting today with various US Fed members speaking from this afternoon through to Tuesday evening. Markets will be watching closely, hoping to glean an idea of what may be in store for global interest rates. On Tuesday, both SA and Great Britain will release their latest unemployment numbers along with the EU’s GDP and followed by the EU’s inflation the next day.

It seems unlikely that the rand is capable of anything at the moment as it’s left licking its wounds following last weeks derailment. As such, market movements are likely to follow offshore markets, most notably those out of the US.

Our range for the week: R18.85/USD – R19.40/USD.

Have a great week ahead.