Photo: File
Photo: File

Rand benefits from softer dollar

Time of article published Oct 22, 2020

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Compiled by Dhivana Rajgopaul

JOHANNESBURG - The rand rose to a one-month high as external tailwinds were strengthened by US fiscal stimulus hopes according to NKC Research.

Risk appetite sapped greenback strength as the dollar’s safe-haven lure dimmed in the face of stimulus optimism and higher commodities prices. On local soil, embattled parastatal Denel warned yesterday that it faces a funding gap of R2.75bn over the next five years, with the additional funding requirement for the 2020/21 FY at R683m to avoid potential loss of “sovereign and strategic capabilities” (including ammunition manufacturing and aircraft maintenance) at the defence firm.

Parastatals, including national carrier SAA and energy producer Eskom, will be among the key points that the finance minister will need to address at next week’s medium-term budget policy statement (MTBPS) in a hostile environment of political resistance against crucial labour & wage reform and privatisation.

At the close of local trade, the rand quoted 1.07 percent stronger at R16.27/$, after trading in range of R16.24/$ - R16.49/$. The rand weakened overnight and is expected to trade in a range of R16.20/$ - R16.50/$ today.

South Africa bourse

The JSE All Share (+0.13 percent) ended stronger yesterday, led by gains in large gold (+2.54 percent) and resources (+1.23 percent) stocks. In the overall emerging market sphere, the MSCI Emerging Market Index (+0.35 percent) traded higher.

Brent crude oil

The Brent oil price traded on the back foot following a surprise build-up in US crude stockpiles in an already oversupplied market. US crude inventories rose by 584,000 barrels last week to 490.6 million barrels, according to American Petroleum Institute (API) data. At the close of local trade, benchmark Brent crude futures quoted 1.64 percent lower at $42.08pb. Crude prices extended losses during Asian trade this morning.

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