Reserve bank governor Gill Marcus displays bank notes bearing the image of former president Nelson Mandela at a press launch, in Pretoria, South Africa, Tuesday, Nov. 6, 2012. New South African banknotes featuring the image of former president and anti-apartheid icon Nelson Mandela are going into circulation. Reserve bank governor Gill Marcus made the first purchase using the new rand notes at a small shop in Pretoria Tuesday. She says the country tries to upgrade its notes every seven years for security reasons as technologies change. (AP Photo/Denis Farrell)
Reserve bank governor Gill Marcus displays bank notes bearing the image of former president Nelson Mandela at a press launch, in Pretoria, South Africa, Tuesday, Nov. 6, 2012. New South African banknotes featuring the image of former president and anti-apartheid icon Nelson Mandela are going into circulation. Reserve bank governor Gill Marcus made the first purchase using the new rand notes at a small shop in Pretoria Tuesday. She says the country tries to upgrade its notes every seven years for security reasons as technologies change. (AP Photo/Denis Farrell)

Rand trades on the back foot overnight

By BR Reporter Time of article published Nov 22, 2021

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Concerns surrounding rising infections in Europe – and a return to more strict lockdown measures – amplifying the contagion effect of the Turkish lira’s plunge, led to a weakening in the South African currency on Friday, according to Oxford Economics Africa.

The impact of risk aversion outweighed support lent by Thursday’s rate lift-off, as the South African Reserve Bank (SARB) opted to raise the repo rate for the first time in three years. Markets shifted sharply after Austria announced plans for a nationwide lockdown and mandatory vaccinations amid rising coronavirus cases, while the German health minister said Germany also can’t rule out a lockdown.

The risk-off shift in response also brought about a rethink of Fed rate hike expectations; Fed funds futures were fully pricing in a rate hike by July earlier, but that probability has fallen to 85 percent since.

At the close of local trade, the rand quoted 0.38 percent weaker, at R15.68/$, after trading in range of R15.55/$ to R15.75/$. The rand traded on the back foot overnight. The expected range of the rand against the dollar today is R15.50/$ to R15.80/$.

Brent crude oil

The threat to economic recovery from the surge in Covid-19, together with anticipated lockdowns in European countries, saw crude prices fall back on Friday. At the close of local trade, the Brent oil price quoted 3.0 percent lower at $79.4/pb. Crude prices traded lower over the weekend and prices ticked marginally higher during Asian trade this morning.

BUSINESS REPORT ONLINE

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