Rand hits wobble as retail sales fall for sixth month
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JOHANNESBURG - THE RAND LOST its momentum against the dollar yesterday as South Africa’s retail sales fell for the sixth consecutive month in September, despite government’s decision to allow more economic activity.
Statistics SA (StatsSA) yesterday said retail sales fell 2.7 percent year-onyear in September after a downwardly revised 4.1 percent decline in August.
However, this fall was the slowest pace since April, when the country went into lockdown.
The rand reacted by moderating at 0.09 percent against the greenback to R15.40 by 3pm, following another slide on Tuesday as investors traded cautiously.
FXTM’s Lukman Otunuga said the retail data highlighted some weakness in South Africa’s economy as it continues nursing deep wounds inflicted by Covid-19.
Otunuga said the major themes influencing global sentiment, and the appetite for the rand, will most likely revolve around vaccine hopes and surging coronavirus cases in Europe and the US.
“Should the local currency appreciate amid vaccine hopes, prices could trade closer towards R15 before the end of this year.”
StatsSA said declines in sales were recorded in all “other” retailers, textiles, clothing, footwear and leather goods, as well as retailers in pharmaceuticals and medical goods, cosmetics and toiletries.
However, month-on-month retail sales rose by 1.1 percent in September compared with a 4 percent increase in August and 0.6 percent rise in July.
On a quarter-on-quarter basis, retail sales increased 23.9 percent between July and September, compared with between April and June.
But retail sales eased 5.1 percent in the three months to September, compared to the same period last year.
StatsSA’s deputy director of distributive trade statistics, Raquel Floris, said South Africans had spent more money on hardware and paint, household goods and pharmaceutical goods in this quarter.
“In particular, stores specialising in hardware, paint, and glass recorded a 12.4 percent rise in sales in the third quarter of 2020, compared to the third quarter of 2019,” Floris said.
Investec’s Lara Hodes said trading conditions remained difficult, underpinned by weak demand.
Hodes said highly constrained consumers, with many facing financial uncertainty continue to remain cautious and mindful of their purchases.
She said Black Friday, Cyber Monday and festive season spend should lend some support to struggling retailers.
“However, a marked move to online purchasing activity is envisioned as many consumers will likely be reluctant to brave the crowds,” Hodes said.
“Retailers will likely want to establish a digital presence or upgrade their e-commerce capabilities to remain relevant and competitive …,” she said.