The rand garnered support from vaccine progress optimism to temper concerns surrounding an extension of the adjusted level 3 lockdown. Photo: Reuters
The rand garnered support from vaccine progress optimism to temper concerns surrounding an extension of the adjusted level 3 lockdown. Photo: Reuters

Rand strengthens against the greenback

By Dhivana Rajgopaul Time of article published Jan 13, 2021

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JOHANNESBURG - The South African currency garnered support from vaccine progress optimism to temper concerns surrounding an extension of the adjusted level 3 lockdown according to NKC Research.

We expect the rand to show some strength in 2021, supported by external factors, as our baseline forecast for world trade sees goods & services rising 8 percent this year after a 9 percent decline in 2020. In an upside scenario – featuring faster vaccine rollout, trade could grow by over 12 percent.

Conversely, in a downside scenario with slower vaccine rollout and renewed infection surges, the trade recovery would stall and be delayed to 2022.

World goods trade recovered strongly in the second half of 2020 and by mid-2021 should be expanding at a double-digit annual pace. However, as the rebound is uneven and tainted with coronavirus-related uncertainties, risks around our baseline forecast are large.

Furthermore, with Democrats winning Georgia’s runoff races, they will hold a “soft” 50-vote Senate majority. Control of the Senate will allow President-elect Biden to enact more of his ambitious fiscal agenda, which boosts prospects for stronger growth in 2021-2022.

At the close of local trade, the rand quoted 0.93 percent stronger at R15.40/$, after trading in range of R15.37/$ - R15.60/$. The rand traded slightly softer overnight. Expected range today R15.00/$ - R15.45/$.

South African bourse

The JSE All Share (-0.35 percent) ended lower yesterday after rising for six sessions in a row, as global Covid-19 cases continue to climb. In the overall emerging market sphere, the MSCI Emerging Market Index (+0.62 percent) traded in the black.

Brent crude oil

The Brent oil price reached its highest level in 11 months yesterday, on the back of expectations of a drop in US crude stockpiles and Saudi Arabia’s planned output cuts. At the close of local trade, benchmark Brent crude futures quoted 1.22 percent higher at $56.28pb. Crude prices extended gains during Asian trade this morning.

BUSINESS REPORT ONLINE

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