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This Rand report is brought to you by Sable International
The ZAR continued its downward streak on Monday and Tuesday as it followed other emerging market (EM) currencies lower. Tensions between the US and Turkey weighed down EM currencies, as Donald Trump threatened economic sanctions.
The Rand’s downward trend continued on Wednesday when Eskom implemented stage 2 load shedding due to complications with several power stations. Wednesday also saw the release of weaker than expected retail sales, which also caused some short-term weakness in the ZAR.
On Tuesday, the Rand broke the R19 to the Pound barrier and continued to lose ground on Wednesday, reaching a low of R19.27 for the first time since June. The draft Brexit deal between the EU and the UK drove the Pound significantly higher against most currencies, including the Rand.
By the end of the week, the Rand reversed some of the previous few days’ losses. It opened at R19.05 to the Pound and peaked at R18.96 before closing at around R19.07 on Thursday.
On Friday, the Rand traded between R18.96 and R19.01 to the Pound. It remained directionless when US-China trade talks stalled, and the draft Brexit deal failed to receive approval from opposition parties in the UK.
Looking at the week ahead, traders will mainly focus on the South African inflation rate on Wednesday, and further developments in the Brexit draft deal.
Market Event Calendar
Wednesday 23 October
The South African inflation rate: Expected to be within the target range and be ZAR positive.
Thursday 24 October
European Central Bank interest rate decision: Expected to remain at zero, a decrease into negative territory will be EUR negative.
