Rand opens stronger ahead of MTBPS and FOMC
DURBAN – The rand opened the week running stronger ahead of the expected Federal Open Market Committee (FOMC) 25bp cut this week with progress in US-Sino trade talks also being key as both mitigated some of the risks of a further marked slowing in the synchronised global economic downturn.
Investec group economist Annabel Bishop said the rand’s recent run of strength to R14.58 a dollar, R16.24 versus the euro and R18.80 to the pound in the past week, from its close the previous week, was chiefly supported by progress in trade negotiations between the US and China, with a partial trade deal having been achieved.
“The domestic currency has settled around R14.60 a dollar so far … but still contains a material risk premium on investor concerns over Eskom, and the projections of further deterioration in public finances expected in the Medium-term Budget Policy Statement (MTBPS), which will occur this week on Wednesday,” said Bishop.
At 5pm the domestic currency was bid 8c stronger than the same time bid on Friday at R14.64 against the dollar. Against the pound, it was 5c stronger at R18.73 and bid at R16.15 to the euro. The unit traded between the range of R14.53 - R14.64 on Monday.
Treasury Partner at Peregrine Treasury Solutions Bianca Botes also said that the Rand held on to gains as global tensions eased.
“Tensions are easing in the market as the US and China seem to be closer to signing a trade deal next month, while the UK appears to have secured an extension to the Brexit deadline from the EU. In addition, expectations for a 25bps Fed rate cut remain high, which is helping the rand to hold onto its recent gains,” said Botes.
Meanwhile, JSE stocks grew with the blue-chip Top40 index increasing 1.35 percent to 49 516.50 points while the broader all share index also lifted 1.12 percent to 55 761.98 points.
The biggest earners were Sasol which gained 11.78 percent at R298.74 followed by Trustco with 6.86 percent at R9.50 then Royal Bafokeng Platinum with 4.52 percent to R43.94. Discovery increased by 3.54 percent at R126.32 while MultiChoice lifted 3.47 percent to R123.41.
The biggest losers were AngloGold which shed 6.86 percent to R303.15 followed by Harmony dropping 3.96 percent to R48.02 while Tsogo Sun decreased by 3.85 percent to R12.25.Life Healthcare also lost 2.82 percent at R23.10 and Goldfields also losing 2.59 percent to R84.38.