November 20, 2023

Currency News

MyCURRENCY News | Week 47 2023

MyCURRENCY News | Week 47 2023

What we know

It seems that despite our best efforts, there are still buyers in the market looking to invest in SA and buy ZAR. It would be naïve to think it were as simple as this (although we wish we could be this reductive) but sometimes the rand’s resilience catches us off guard when it gains half a rand in a session. 

Tuesday morning saw our unemployment decrease slightly from 32.6% to 31.9%, though not much of a muchness in the grand scheme of things, especially given that the expectation was for an increase to 32.8%. The real big-ticket item was the US inflationary data later the same afternoon which has led to a pivotal shift in market sentiment. US inflation Month on Month (MoM) came in at 0%. The USD and therefore the Dollar Index (DXY) immediately started to run weaker, and the rand enjoyed the aforementioned 50cent gain, eventually going as far as 3.3% (or +-60cents) better by Wednesday afternoon.

The ZAR continues, for the time being, to be primarily driven by USD movements, currently underpinned by USD weakness – there has however been a small divergence between the pair from Friday afternoon into Monday this week. The DXY has continued to lose ground against the basket of currencies, while the ZAR has moved independently and given up a portion of its gains with us now trading at R18.35/USD.

What others say

BloombergArgentina takes leap into unknown with Javier Milei as President

“Libertarian outsider Javier Milei won Argentina’s presidency promising a radical shakeup to fix decades of policy mismanagement, a strategy that resonated with a populace suffering under a nosediving economy and one of the world’s fastest inflation rates.”

Daily MaverickJuly ’21 unrest — 65 in dock facing terrorism and other charges linked to deadly violence

“Two years after the July 2021 upheaval left a trail of destruction and more than 350 people dead, 65 people arrested and implicated in the mayhem will finally face justice. Among the charges are terrorism, conspiring or inciting the commission of terrorism, sedition, conspiracy to commit murder, public violence, conspiracy to commit public violence and incitement to commit public violence.”

IB TimesLithium miners bet on direct extraction in Bid for efficiency, sustainability

“The global demand for lithium is projected to increase seven-fold from 2023 to 2030. As the industry expands to a total value of $400 billion in the coming years to meet surging demand, lithium mining’s footprint on global ecosystems and local economies will spread accordingly.”

What we think

Last week we said that “the dollar has recovered a large portion of its losses (around 50%), and there are some high volatility news announcements on the horizon. With Inflationary figures out the US due on Tuesday, and UK on Wednesday, as well as unemployment claims out the US set to be announced on Thursday, any shocks here should see volatility pick up substantially.”

On the news front, most market news from the international market is second tier relative to last week (barring any major upsets), with our local data being centre stage – we have our inflationary data on Wednesday morning followed by our Monetary Policy Committee (MPC) meeting on Thursday afternoon.

Expectations are for inflation to be near flat from last month at 5.4% and for rates to be held firm at 8.25%.

After testing R18.10/USD on Wednesday, the rand has taken its foot off the pedal and it seems that rush lower could not be substantiated – an ‘overreaction’ if you will, and now seems to be trading in-between support and resistance levels. We would therefore hope for muted trading until a trading channel is established again, but we can’t shake the feeling that the ZAR still has a good amount of bite left in it. It’s just which way we will ‘buck’ that remains to be seen.

Our range for the week: R18.15/USD – R18.65/USD.

Have a great week ahead.