JOHANNESBURG - The rand ebbed during the European session in the face of second-wave infection fears according to NKC Research.
On Thursday, the banking association director warned that the non-performing loans (NPL) ratio could hit 10 percent this year – the highest ever, smashing the 6 percent level recorded in 2009 – which is estimated to be around R400 billion worth of loans. In April, the NPL ratio stood at 4.3 percent. While the banking sector entered the pandemic with a strong capital position, the rapid deterioration in asset quality threatens to deplete capital buffers under a prolonged shock.
The ‘advanced level 3’ conditions announced on Wednesday evening represents government’s capitulation to cease the strict lockdown measures as more than 91 percent of respondents to a recent survey indicated concerns to meet monthly obligations. At the close of local trade, the rand quoted 1.35 percent weaker at R17.45/$, after trading in range of R17.17/$ - R17.45/$. Expected range today R17.20/$ - R17.60/$.
South African bourse
The JSE All Share (-0.16 percent) eased somewhat yesterday but remains on track for a weekly (+0.56 percent) gain. In the overall emerging market sphere, the MSCI Emerging Market Index (+0.06 percent) traded higher.
Brent crude oil
The Brent oil price was lifted by commitments by Opec that would see oil producers follow through on supply cuts. At the close of local trade, benchmark Brent crude futures quoted 1.80 percent higher at $41.26pb. Crude prices extended gains during Asian trade this morning.