Rand dips ahead of GDP data
JOHANNESBURG – The rand dipped on Tuesday, ahead of gross domestic product (GDP) data that is expected to show a weak third-quarter performance.
Analysts polled by Reuters have predicted a 0.1 percent GDP growth in the third quarter of 2019 in seasonally-adjusted quarter-on-quarter terms. This after a 3.1 percent expansion in the second quarter.
Investec economist Kamilla Kaplan said high frequency economic indicators suggested that the momentum in economic activity waned in this year's 3rd quarter, with GDP forecast to have moderated to 0.0 percent quarter on quarter seasonally adjusted annualised from 3.1 percent quarter on quarter seasonally adjusted annualised in the 2nd quarter.
"For the year as a whole, GDP growth is widely expected to come in at around 0.5 percent year on year after the economy recorded growth of just 0.8 percent year on year in 2018," said Kaplan.
The rand surprisingly firmed sharply and is quoted at this morning and turned out to the best performing emerging market currencies currency by some margin, according to TreasuryONE dealer Andre Botha.
"We have our 3rd quarter GDP number out today which could have an impact on the rand. Economists are forecasting a 0.4 percent year-on-year number and a 0.1 percent month-on-month number.
Statistics South Africa will release the data at 11:30am.
Almost two years after taking office, President Cyril Ramaphosa has struggled to get Africa’s most industrialised economy firing on all cylinders.
Investment levels and business confidence remain weak.
Government bonds were flat on Tuesday, with the yield on the benchmark 2026 instrument at 8.46 percent.
South African markets closed in the red on Monday, dragged by losses in telecommunication sector stocks.
Blue Label Telecoms plunged 6.5 percent, MTN Group dropped 6.4 percent and Vodacom Group declined, and 5 percent after the competition commission announced that the mobile operators could be prosecuted if they continued to keep overcharging for data.
Additional reporting by Reuters.