JOHANNESBURG - The South African rand regained some ground although second-wave infection fears kept a lid on gains according to NKC Research.
This week, the Sarb is scheduled to meet against a backdrop of multi-year low inflation and a crumbling domestic growth outlook. While our baseline expectation is for the Sarb to opt for a cautious approach with a maintenance of the repo rate at 3.75 percent, the balance of risks is tilted towards an additional rate cut of 25 bps. With the widening fiscal deficit – expected to balloon to 82.1 percent of GDP in 2020/21 FY – which will require higher government bond issuance, the steepening yield curve should again open up attractive carry & roll positions. At the close of local trade, the rand quoted 0.42 percent stronger at R16.66/$, after trading in range of R16.65/$ - R16.76/$. The rand traded on the back foot early this morning. Expected range today R16.60/$ - R17.00/$.
South African bourse
The JSE All Share (+0.33 percent) ended higher at the end of last week, driven by gains in large gold (+2.09 percent) and resource (+1.33 percent) shares. In the overall EM sphere, the MSCI Emerging Market Index (+0.86 percent) traded higher.
Brent crude oil
The Brent oil price fell suddenly late on Friday after trading steady for most of the session. Rising Covid-19 cases are creating uncertainty over economic recovery, which weighs on fuel demand prospects. At the close of local trade, benchmark Brent crude futures quoted 0.62 percent lower at $42.99pb. Crude prices traded weaker during Asian trade this morning.
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