File photo: Reuters
File photo: Reuters

WATCH: Rand remains on the back foot

By Compiled by Dhivana Rajgopaul Time of article published Feb 25, 2020

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JOHANNESBURG - The South African currency remained on the back foot as coronavirus-related risk aversion swept through markets ahead of a pivotal week on the South African front according to NKC Research. 

Emerging market currencies slumped to a four-month low on Covid-19 fears. Market watchers however await tomorrow’s budget with abated breath, hopes pinned on a modicum of clarity on the embattled parastatals and dire debt situation. We anticipate that the budget outcome end-February will not be enough to avoid a Moody’s downgrade, which will include a heavier tax burden to further stifle private consumption growth, and hence will be the last nail in the coffin to force a downgrade action to junk status. At the close of local trade, the rand quoted 0.22 percent weaker at R15.13/$, after trading in range of R14.98/$ - R15.19/$. Expected range today R15.00/$ - R15.30/$.

South African bourse

The JSE All Share (-4.28 percent) ended deep in the red yesterday, as the COVID-19 spreads globally. In local news, Sasol (-3.31 percent) shares slumped yesterday, hit by a combination of weaker international oil prices and dismal half-year earnings. The petrochemicals group reported that its headline earnings per share (Heps) fell by 74 percent to R5,94 per share for the six months ended December 2019, weighed by soaring costs at its Lake Charles Chemicals project (LCCP) in the US. In the overall emerging market sphere, the MSCI Emerging Market Index (-2.67 percent) fell.

Brent crude oil

The Brent oil price fell sharply yesterday due to concerns that the spreading coronavirus, outside of China, would hit global fuel demand more severely. At the close of local trade, benchmark Brent crude futures quoted 1.91 percent lower at $56.00pb. Crude prices regained slightly during Asian trade.

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