File Image: INLSA
File Image: INLSA

Rand trades little changed against the greenback

Time of article published Jul 27, 2020

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Compiled by Dhivana Rajgopaul

JOHANNESBURG - The South African currency struggled for direction as souring US-Sino relations clipped risk appetite while a softer monetary policy stance trimmed carry appeal according to NKC Research.

The economy is expected to contract by an abysmal 9.1 percent this year – compared to a consensus forecast of -8.0 percent, before recovering with a 6.5 percent expansion next year. In turn, we expect that the fiscal deficit will balloon to 15.6 percent of GDP this fiscal year before narrowing to 11.0 percent of GDP in FY 2021/22. Concomitantly, public debt is expected to rise to 82.1 percent of GDP by year-end before peaking at around 94 percent of GDP over the medium term. That being said, with the local unit trading at undervalued levels, the rand is expected to firm from an average of R17.0/$ this year to R16.8/$ in 2021. At the close of local trade, the rand quoted 0.18 percent stronger at R16.68/$. Expected range today R16.45/$ - R16.75/$.

South African bourse

The JSE All Share (-0.76 percent) ended in the red when markets closed on Friday. Large technology stocks were the day’s biggest laggards, down by 4.22 percent. In the overall EM sphere, the MSCI Emerging Market Index (-1.59 percent) also fell.

Brent crude oil

The Brent oil price whipsawed on Friday during choppy trade. A softer greenback pushed prices higher but rising Sino-US tensions and more coronavirus cases caused a price reversal in the afternoon. At the close of local trade, benchmark Brent crude futures quoted 0.02 percent lower at $43.29pb. Crude prices traded flat during Asian trade this morning.

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