Rand stable as market watches for local data, and load-shedding
The local currency is steady after a steep fall on Monday, with geopolitical developments and domestic data in focus
The rand was benefiting from the return of calmness to global markets on Tuesday morning, finding stability after Monday’s 21c fall against the dollar.
There were some positive international developments to give the market some cheer — including the resumption of trade talks between US and Chinese officials — although the health of SA’s economy is also in the spotlight.
At 9.30am the rand was 0.11% firmer against the dollar at R14.369, but flat against the euro and pound at R16.344 and R18.068 respectively. The euro was 0.17% stronger at $1.1374.
At the same time, the bid on the local 10-year government note was at 9.22% from 9.155%.
A flurry of negative international economic and political news had put global risk assets under strain on Monday, including news that UK Prime Minister Theresa May had failed to secure backing for her draft Brexit deal from her party, raising the chances of no-deal divorce from the EU.
The US-China trade war and political protests in France are also decreasing investor appetite for risk assets, although local factors offer the prospect of giving the rand direction on Tuesday.
Stats SA is scheduled to release October’s mining figures at 11.30am and manufacturing at 1pm.
Mining is expected to have continued September’s 1.8% decline, but at a slightly slower pace of about 1.5%, according to a poll of economists by Trading Economics.
Manufacturing output is expected to have picked up to 0.8% from 0.1%.
Analysts expect international developments to largely determine the direction of the rand, including whether promises by French President Emmanuel Macron to increase the minimum wage and cut taxes on pensioners will quell ongoing protests.
However, the problems at embattled utility Eskom are weighing on sentiment locally. These issues are making the local currency vulnerable to these offshore developments, analysts said.
Eskom’s debt issue need to be resolved quickly in order to unshackle the economy ahead of 2019, said Sasfin Securities fixed-income trader Alvin Chawasema.