February 27, 2023

Currency News

MyCURRENCY News | Week 9 2023

MyCURRENCY News | Week 9 2023

What we know

Despite the often prolonged periods of doom and gloom experienced in SA’s political and economic realms, it is important to remain abreast of current news – no matter how much we might want to bury our heads in the sand like an ostrich. This past week has been one of those weeks in our opinion, even though there were sprinklings of good news that would normally have been well received.

The introduction of tax rebates for both businesses and private households against investments in solar infrastructure is a nice touch from government, but it’s certainly too little too late. The fact that this has only transpired well after the system has all but imploded should boggle the mind of any logical person.

The rand did appreciate following our budget speech on the back of a fairly dry, but importantly coherent and thought-out fiscal approach to our current monetary black holes. *Ahem Eskom* Though, that was all undone in a rather short time in the build up to and subsequent release of FATF’s decision that SA would be grey listed. We are at least afforded the opportunity to address the 8 key areas by no later than the end of January 2025. Until then, we will be subject to increased monitoring which adds extra hurdles to our domestic institutions such as banks as well as their offshore counterparts.

What others say

News 24Solar panels are in hot demand, but SA buyers face delays

“Finance Minister Enoch Godongwana announced two tax incentives last week to encourage the rollout of rooftop solar PV. Businesses will be able to claim tax relief on 125% of the cost of the renewable energy projects as of 1 March 2023. This incentive will apply for two years. Households will be able to claim tax relief of 25% on solar equipment but not batteries and inverters. This incentive is capped at R15 000 and is only valid for one year from 1 March 2023.”

MoneywebGreylisting should make South Africans see red

“The decision is a massive embarrassment, as South Africa failed to implement the necessary legislation and measures to prevent money laundering and terror financing in four years.”

Daily MaverickIntroducing the four crime cartels that have brought Eskom and South Africa to their knees

“As the political instability increases and President Ramaphosa continues to delay the announcement of his new Cabinet, which is expected to remove South Africa’s deputy president, the country hovers on the edge of the abyss.”

BloombergUkraine Latest: Saudis support Kyiv with $400 million aid plan

“Vladimir Putin said NATO arms supplies to Ukraine make the alliance a “participant” in the conflict. It’s not a new thought, but one Russia’s president hasn’t followed through on, even as Western allies provide Kyiv with more sophisticated armaments.”

What we think

Last week we said that “There are significant difficulties both internationally and domestically that need to be tackled before a sustainable rand rally can be achieved. Right now, the volatility being experienced in markets is not conducive to rand strength. This uncertainty leaves emerging markets like us open to sharp sell-offs in the short term.”

Normally, our key monthly data event comes on the first Friday of the month – this month however the US Non Farm Payroll numbers will only come out on 10 March. So, trading will have to take direction from our own unemployment numbers due tomorrow morning and the spattering of US and EU data points throughout the week.

With our grey listing having pushed the USDZAR significantly higher on Friday, offshore markets are still weighing up the potential downsides and so we expect trading to still remain fairly choppy early into this week. The trend over the past month has been nothing but pain for the ZAR, with us peaking at R18.49/USD – it remains to be seen if we will breakthrough the R18.50/USD level and continue the downwind spiral. If we manage to stay below, we would hope we could consolidate and form a trading channel before a slow ZAR appreciation to slightly less elevated levels.

Our range for the week: R18.15/USD – R18.60/USD.

Have a great week ahead.