December 20, 2022

Currency News

MyCURRENCY News | Week 51 2022

MyCURRENCY News | Week 51 2022

What we know

Never a dull moment in South Africa – even with most of the country winding up for Christmas, the ANC elective conference managed to shake the USD by its ankles and send the ZAR on a tear. General market sentiment leading up to the results certainly wasn’t positive, at least judging by the way the ZAR had depreciated steadily in the build up to the event, reaching as high as R17.70/USD on Monday morning. The most common mantra seemed to be that we’d rather have the devil we know, than the devil we don’t along with growing fears that there would be an upheaval in the ANC resulting in Ramaphosa being ousted.

With Ramaphosa and his backers ultimately cementing 5 out of the top 7 positions, he finds himself with significant backing compared to his first term as ANC President. This saw us drop a staggering 50cents from R17.70/USD to R17.20/USD over the course of Monday morning. This will hopefully lead to some fundamental changes within the ANC – first of which should be a cabinet reshuffle. It was always touted that Ramaphosa would need to play the long game, though it seems he may be playing the longest of long games and it would be nice to see some reform in our lifetime. A person can dream…

In other news, last week saw the three major currencies (USD, EUR and GBP) all hike interest rates by 0.5% as expected as they continue to attempt to smother inflationary pressures on their economies. This therefore reduced the interest rate differential between the ZAR and the respective currencies. SA’s next MPC announcement is a long way away as it only follows the budget speech in March.

What others say

Daily MaverickWith ANC election done, here’s what’s next on Ramaphosa’s list: The crumbling state, Cabinet reshuffle, 2024 polls

“Effectively, that means Ramaphosa remains in Luthuli House and the Union Buildings, set to steer a governing party that’s admitted to being in an existential crisis and in decline. Or as the organisational report put it: “We must acknowledge that the ANC is experiencing a crisis threatening its existence. We cannot expect to achieve any of our goals and regain the people’s trust if we fail to take the necessary actions.”

Visual CapitalistThe science of Nuclear Fusion

“Nuclear fusion is a fairly clean energy source as it does not produce harmful atmospheric emissions and only produces a small amount of short-lived radioactive waste.
Scientists have been trying to replicate it on Earth for almost 70 years, using isotopes of hydrogen – deuterium and tritium – to power fusion plants.”

IB TimesBelarus may start sending troops to Ukraine, Kyiv should ‘Prepare for this scenario’: opposition leader

“Tsikhanouskaya claimed in her interview with the Kyiv Post that most Belarusians are opposed to joining the war in Ukraine, but the possibility of Belarus joining Russia’s military offensive remains.”

What we think

As the world grinds to a halt for the festive period, liquidity in markets has been drying up and volatility has increased as detailed by the most recent moves on the USDZAR. Though, with the deluge of public holidays and long weekends coming for South Africa, 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.

This will be our last opinion piece for 2022 and we will be back in the new year on 9 January. Until then, enjoy the festive break, travel safe and we will see you in the new year. 

Our range for the week: R17.05/USD – R17.45/USD.

Have a great week ahead.