October 17, 2022

Currency News

MyCURRENCY News | Week 42 2022

MyCURRENCY News | Week 42 2022

What we know

Here we are a week later trading at the same rate that we were last Monday morning (R18.15/USD). Though, that doesn’t mean there wasn’t a bit of excitement in between, and by exciting what we actually mean is that we’ll be needing to top up our heart medication prescription as a result. 

The cause of the USD’s sharp movement higher on Thursday last week was due to a near miss on the Dollar front when core inflation came out marginally higher at 6.6%. This saw us move from as low as R18.20/USD to as high as R18.58/USD in a heartbeat. Fortunately, the move was short-lived and saw us retrace back down late into Friday’s trading. There seems to be a consolidatory area of between R18.05/USD and R18.30/USD forming where the rate retreats to after rejecting recent moves.

We remain hopeful that loadshedding is able to continue its decline and be completely eradicated in the near future as the combination of power outages and a failing transport system are not the kindest environment for economic growth. The Transnet strikes are starting to cut deep with an estimated cost of R1bn per day. This breakdown in our transport network does not bode well for the wounded city that is Durban who just cannot manage to get a leg up at the moment.

The delivery of our Midterm Budget (MTBPS) is closing in on us and is due for 26 October. Our finance minister, Godongwana, has already tabled some topics and will be delving into deeper detail on the day. However, it will be quite interesting to hear their plans on Eskom’s debt relief plan with Eskom’s debt now sitting at R400bn. 

What others say

Daily MaverickR1bn a day — SA counts the cost while Transnet strike drags on

“On Wednesday evening, after talks brokered by senior government ministers, hopes for a deal that would end the strike were dashed when unions rejected a revised offer of 4.5%. They demanded 7% and threatened to intensify the strike.”

MoneywebChina wants to be part of global economy despite domestic focus 

“China will continue to open up to the global economy even as it focuses on more high-quality growth and fostering domestic demand, the nation’s top economic planner said.”

Viusal CapitalistVisualizing the world’s largest iron ore producers

“Iron ore demand is expected to rise in the coming years as steel plays a crucial role in producing and distributing energy. Steel is used extensively in agriculture, solar and wind power, and also in infrastructure for hydroelectric. Furthermore, steel is used for the production of transformers, generators, and electric motors, along with ships, trucks, and trains.”

Daily MaverickMr Kwarteng, would you mind joining us in the dunce’s corner?

The joke going around shortly before UK finance minister Kwasi Kwarteng got fired on Friday, 14 October, was that he was having trouble getting a flight back to the UK from the IMF conference in Washington because nobody wanted him near business or economy. 

It didn’t make much difference, though, because UK Prime Minister Liz Truss fired him as soon as he did get back, appointing Jeremy Hunt in his stead.

What we think

Last week we said that “It has indeed been a tumultuous week, and it looks set to repeat itself again this week. Anything north of R18.30/USD takes us into uncharted territory from a technical point of view, and so we will be watching with a keen eye to see if traders have the gall to push the Rand further.”

The Rand was certainly tested last week but showed some resolve by managing to pullback slightly more than the Dollar Index (DXY) and sees us trading just under R18.20/USD as the market positions itself for the week ahead.

There are some interesting data events on the calendar this week with key Chinese data tomorrow morning. Given our strong economic ties to China, if these numbers are positive, it could help the Rand stage a corrective move below R18.00/USD.

Otherwise we have our own inflation out on Wednesday which is expected to have eased somewhat which would be encouraging and confirm that we have peaked – though it is still expected for us to continue hiking interest rates come November 24th.

Our range for the week: R17.90/USD – R18.30/USD.

Have a great week ahead.