Rand loses ground against the greenback

Time of article published Oct 16, 2020

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Compiled by Dhivana Rajgopaul

JOHANNEBSURG - The South African currency’s allure dimmed on Thursday as risk aversion swept through global forex markets while investors were cautious ahead of the president’s recovery plan announcement according to NKC Research.

The rand was hit by frosty reception to emerging market currencies, sliding weaker in tandem with a slew of risk-sensitive liquid currencies including the Mexican peso, Turkish lira and Russian rouble.

Risk-off mood was sparked by concerns of second-wave infections – and the accompanying return of more strict lockdown measures – together with evaporating hopes for a swift US fiscal stimulus implementation and uncertainty related to the November US election.

On local soil, the newsfeed was dominated by the president’s economic recovery plan. While the plan contained numerous positives, the lack of information on where the funding will come from means that we will have to wait for the MTBPS to see how committed broader government is to Ramaphosa’s vision.

At the close of local trade, the rand quoted 0.77 percent weaker at R16.68/$. Expected range today R16.50/$ - R16.75/$.

South African bourse

The JSE All Share (-0.99 percent) fell as losses occurred across the board. Pepkor (+0.28 percent) said yesterday that it expects a drop of around 20 percent in annual earnings, mainly as a result of the adverse impact of Covid-19 on sales and provisions. The local retailer, majority owned by Steinhoff (-5.88 percent), said that it concluded refinance talks to push a R5bn debt repayment that was due in May 2021 out to September 2023.

Brent crude oil

The Brent oil price traded sharply lower yesterday due to demand concerns after some European countries re-imposed lockdown restriction to prevent the coronavirus from spreading. At the close of local trade, benchmark Brent crude futures quoted 2.70 percent lower at $42.10pb. Crude prices traded whipsawed overnight.

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