THE rand retained strength on external factors as the EM currencies index hit a high, according to NKC Research.
A dovish US Federal Reserve fuelled appetite for risk, with the greenback languishing near five-month lows. This came in reversal of earlier fears for an earlier shift towards tightening.
Strong CPI figures in the US have intensified the debate about the inflation outlook, especially in the context of soaring commodity prices. In recent decades, commodity surges have not been strongly associated with inflation, but some of the structural and policy-related factors behind this may be shifting, raising the risk of an inflation overshoot.
While we think a large inflation overshoot is possible, rather than probable, the uncertainty around this issue is high. Considering the possible upside potential for consumption – related to savings behaviour as economies open up – it appears the balance of risks is shifting in an inflationary direction.
At the close of local trade, the rand was quoted 0.26 percent stronger at R13.78 a dollar after trading in range of R13.77-R13.85 a dollar. The local unit remained on the front foot overnight. The expected range of the rand against the dollar today is R13.70- R13.90
South African bourse
The JSE All Share (+0.0 percent) ended higher yesterday, but it was a mixed bag as losses in large technology (down 0.77 percent) and resource ( down1.04 percent) were counterbalanced by gains in financial (up 0.78 percent) and gold (0.82 percent). In the overall emerging market sphere, the MSCI Emerging Market Index (up 0.48 percent) traded in the black.
Brent crude oil
Brent oil prices have bounced from very low levels at the height of lockdowns last year as massive producer cutbacks and rising demand lifted sentiment. Oil demand has been trending up in many countries. The picture in the OECD area is now clearer with Europe and the US easing restrictions this month, as Covid looks to be under control and the summer tourist season is approaching. But global Covid cases are still very high in Brazil and India, and vaccination programmes have been slow. At the close of local trade, benchmark Brent crude futures were quoted 0.33 percent lower at $68.57 per barrel. Crude prices traded little changed during Asian trade this morning.
BUSINESS REPORT