Rand slips to two-week lows at start of busy week
The rand was shaky on Monday morning, slipping through R12/$ for the first time in two weeks, at the start of what could be a decisive week for the local currency.
Markets will have plenty to digest in terms of key data and events this week.
First up will be inflation data on Tuesday, along with the Reserve Bank’s quarterly bulletin, which contains crucial current account data.
Economists expect inflation to have moderated to an annual rate of 4.10% in February, from 4.40% in January, a scenario that is likely to give the Reserve Bank a reason to consider cutting interest rates.
Win Thin, global head of emerging market currency strategy at Brown Brothers Harriman, said the Bank could announce a 25 basis point cut in rates after its monetary policy committee.
But the committee’s ultimate decision on rates rests on an array of factors, including how it perceives the global monetary policy environment evolving.
The US Federal Reserve’s policy in particular has the potential to benefit the dollar at the expense of the rand, thus hurting the outlook on inflation.
The US Fed is also expected to conclude its policy meeting on Wednesday, with markets expecting a 25-basis point increase in borrowing rates.
Moody’s will wrap up the week with the release of its ratings review on SA.
Moody’s is the only major ratings agency to still rate SA’s debt at investment grade, after S&P Global Ratings and Fitch lowered it to junk in 2017.
Any further downgrade will automatically be a universal one, in which case the country’s debt will be excluded from the Citi World Government Bond Index.
At 9.31am, the rand was at R12.0169 to the dollar from R11.9999, R14.7439 to the euro from R14.7302 and at R16.7369 to the pound from R16.7180.
The euro was at $1.2268 from $1.2287.