February 13, 2023
MyCURRENCY News | Week 7 2023
What we know
We’ve said it before, and we’ll say it again – trying to call the Rand exchange rate is a futile game. Even if you’re right, it’s only for a second and then the currency swings violently in the opposite direction. Naturally, this past week was more of the same one way traffic as the Rand continued its trajectory upwards and onwards from R17.45/USD to where we are now at R18.05/USD. An eye-watering move of 3.5%!
Our eyes were turned to SONA this week as there were quite a few surprises expected from the President. The addition of an “Energy Minister” (touted to cost taxpayers in the realm of R37million Rand for the privilege) in conjunction with the state of disaster are supposed to cut red tape and ensure that resources are allocated directly to where they are needed. Though, the rational fear we have is that the only thing being cut will be the bank line as government cronies rush to deposit their ill-gotten gains and kickbacks due to the slackening of checks and balances.
The Turkish Lira, once a leading indicator of the performance of the emerging markets internationally, has fallen from its perch over the years under Erdogan’s guidance. Turkey is perhaps the only country to have had more finance ministers in a short period of time than South Africa! Sadly, the country is now on a life-line following the devastating earthquake with the death toll still rising daily.
Further East, Ukrainian forces are still fighting tooth and nail for each inch of ground. The Russian’s seem to be continuing with their tactic of trying to overwhelm the enemy purely by number in the hope that the Ukrainian’s run out of ammo before they run out of conscripts. A truly sad tale.
What others say
Bloomberg – Transnet taps private firms to run South African ports, railways
“The state-owned company is exploring the option of creating a rolling-stock leasing firm that would enable private entities to use its rail network, and plans to outsource the operation of a planned dry bulk terminal at Richards Bay on the east coast, it said in a response to queries. The process of selecting a partner to help it run Africa’s biggest container terminal in the eastern city of Durban, which it plans to expand, is also at an advanced stage.”
Reuters – Analysis: In China, Tesla could win electric vehicle price battle – but lose the war
“While Tesla has increased sales in China, its second-largest market, it has also lost share. From 15% in 2020, its share of the China EV market fell by a third to just 10% in 2022, according to data from the CPCA.”
Reuters – Europe’s spend on energy crisis nears 800 billion euros
“European countries’ bill to shield households and companies from soaring energy costs has climbed to nearly 800 billion euros, researchers said on Monday, urging countries to be more targeted in their spending to tackle the energy crisis.”
IB Times – Ukraine successfully eliminates more than 2,000 Russian soldiers over the weekend
“Russia likely suffered its highest rate of casualties since the initial week of its invasion, the United Kingdom’s Ministry of Defense (MoD) said.
“The mean average for the last seven days was 824 casualties per day, over four times the reported over June to July,” the British ministry said in a Sunday intelligence briefing.”
What we think
Last week we said that “with SONA this week, the budget speech in 2 weeks’ time, and the usual political and electrical shenanigans that seem to now be part of everyday life in Mzansi. Against that backdrop, it’s hard to argue for ZAR-specific strength until after these events have taken place.”
Looking back at last weeks performance, we can’t help but feel somewhat bitter-sweet following the Rands dismal performance. Sadly, our outlook has not changed, though the potential downside would be slightly less given that we have experienced such a drastic movement in such a short time.
There is a decent amount of data events out this week, with US inflation out on Tuesday afternoon, followed by both our own and the UK’s inflation numbers out on the following day. On a less quantitative note, the US Fed members will be speaking most evenings this week and giving us insight into their thoughts on how the Fed may possibly be acting in the near future which naturally has a direct effect on emerging markets like ourselves.
Our range for the week: R17.75/USD – R18.20/USD.
Have a great week ahead.