Rand back under R13/$ after sharp drop on Busisiwe Mkhwebane’s Reserve Bank move
The Bank releases its quarterly bulletin today, with both the trade and current account surpluses expected to have widened in the first quarter
The rand was hovering under R13/$ on Tuesday morning after Monday’s 1.4% plunge.
The rand was trading at R12.98/$, R14.48/€ and R16.54/£ at 7am.
The rand shot to R13.06/$ from R12.79/$ at about 1.45pm on Monday after Public Protector Busisiwe Mkhwebane — who is widely seen as close to President Jacob Zuma — called for the independence of the Reserve Bank to be weakened.
Mkhwebane said the Constitution should be changed to say: "The primary object of the Reserve Bank is to promote balanced and sustainable economic growth in the Republic, while ensuring that the socioeconomic wellbeing of the citizens are protected".
This would alter the existing clause in the Constitution, which says: "The primary object of the South African Reserve Bank is to protect the value of the currency in the interest of balanced and sustainable economic growth in the Republic."
"This is quite unusual that a public protector has been so specific on changing the Constitution or indeed been so radical on transformation," Nomura economist Peter Attard Montalto said in an e-mailed note.
"The Reserve Bank is also one of few ratings positives for the ratings agencies. The very fact this issue is being raised and the Bank dragged into the debate is negative," Attard Montalto said.
The Bank releases its quarterly bulletin for the second quarter on Tuesday, along with its leading indicator and the first quarter’s current account.
"The current account deficit is forecast to have widened slightly to 1.9% of GDP [gross domestic product] in the first quarter from a deficit of 1.7% in the fourth quarter of 2016," Investec Bank economist Kamilla Kaplan said in her weekly note.
"Based on available data from the Reserve Bank, pertaining to the international trade in goods and services, the seasonally adjusted trade surplus increased modestly to R57.4bn from R55.7bn. Expressed as a percentage of GDP, the trade surplus remained steady at 1.3% of GDP in the first quarter."
Stock exchanges trading ahead of the JSE’s opening on Tuesday generally took their cue from the US, where the S&P 500 index rose 0.83% to a fresh record of 2,453 points on Monday.
Tokyo’s Nikkei 225 index was 0.97% higher, but Sydney’s S&P/ASX 200 was down 0.52%.