Moody’s warned that there is not enough being done at the local government level to reel in fiscal spending to ensure policy stability. Photo: Reuters.

CAPE TOWN - The rand opened weaker on Monday after a tumultuous week that saw the currency breech the R15 mark in what can safely be described as the worst week for the domestic unit and emerging markets in a while.

The rand gave most people a bit of a fright when it spiked to above R15.00 against the US dollar. TreasuryONE senior currency dealer Andre Botha said the reason for the sudden spike was the fact that Turkey weakened when the US threatened more sanctions.

“Looking forward to the week, we have seen the US dollar slid against most currencies. We expect the pullback was mostly due to the market correcting itself after the US dollar went on a tear the last couple of weeks. 

“Speculation that the US and China are trying to settle their differences on trade tariffs. This will further help EM currencies should a deal be brokered, but it might take a while before we get there,” said Botha.

At 5pm the domestic currency was bid 13c firmer than Friday’s same time bid at R14.65 a dollar. Against the pound sterling the rand was 14c stronger at R18.69 and to the euro, the currency firmed 12c to R16.75.

Peregrine Treasury Solutions corporate treasury manager, Bianca Botes, said the debate about nationalising the SA Reserve Bank might feel like déjà vu, but the EFF’s motion before parliament did not impress the rating agencies at all.

“On Friday, Moody’s warned that there is not enough being done at the local government level to reel in fiscal spending to ensure policy stability, which just adds to South Africa’s credit rating and hence currency woes.

“The rand is jittery and remains on the back foot, and although the recovery from Friday's low of R14.99 a dollar is a relief, there are no guarantees that the level will not be tested again and even less of a guarantee that we won't break it this time around,” said Botes.

Emerging-market assets may be headed for more tumult as the volatility that gripped nations from Turkey to South Africa and Russia shows few signs of ebbing, according to Bloomberg.

Last week was a chaotic week for developing nations dragging stocks along with currencies to near their lowest levels in more than a year. 

JSE stocks, however, recouped some of those losses with the blue-chip Top40 gaining 0.99 percent to 51 101.53 points, while the broader all share index inched up 0.88 percent to 57 145.62 points.

Top gainers among major movers were Barloworld, which grew 4.84 percent to R123.55 followed by Anglo American Platinum, which added 2.54 percent to R421.26. MTN dialled up 2.43 percent to R103.45, while RMI increased 2.23 percent to R39 and RMB scored 2.2 percent growth to close at R77.

The biggest losers were Gold Fields, which dropped 2.97 percent to R34.60, followed by AngloGold Ashanti, which declined 1.9 percent to R105.65. Montauk fell 1.86 percent to R91.31, while Italtile eased 1.81 percent to R13.48 and South32 gave uo 1.27 perent t end the day at R35.67.

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