The rand gained for an eighth session running, its longest winning streak since December 2012 when President Cyril Ramaphosa became ANC deputy president at the party’s Mangaung conference.
The gains in 2012 came in the lead-up to and throughout the conference as Jacob Zuma, under pressure on many fronts at the time, received fewer votes for president than Ramaphosa did for deputy. Markets were hoping the latter would put SA on a better economic footing as he was considered more business-friendly.
International factors are more likely to be affecting the rand’s performance now though as markets continue to assess last Friday’s comments by US Federal Reserve chair Jerome Powell.
While Powell said stimulus tapering was coming, he was quite dovish on when the central bank would consider raising interest rates.
At 6.50pm on Wednesday, the rand had strengthened 0.75% to R14.3950/$, a three-week high, 0.49% to R17.0515/€ and 0.64% to R19.8401/£. The euro was 0.34% firmer at $1.1847.
Investec chief economist Annabel Bishop said while the rand could firm further to R14/$, it isn’t expected to remain that strong for an extended period.
“This [the rand’s strength] will still depend on continued dovish Fed comments, as well as US data not exceeding market expectations, particularly on the jobs front,” Bishop said.
“Friday afternoon’s US payroll figure has the potential to interrupt the rand’s momentum, and the domestic currency will remain volatile.”
The JSE closed weaker with miners taking a slap from disappointing Chinese manufacturing data. China is the world’s biggest consumer of commodities mined in SA and a slowdown there could affect SA exports.
In the US, consumer confidence fell faster than expected, with August's reading plunging to the lowest level since February.
The economic data indicates the world’s two largest economies are showing signs of short-term weakness as the spread of the Covid-19 Delta strain threatens the pace of recovery.
“Investors may view the recent weakness across the US consumer and both China’s manufacturing and service sectors as temporary, and [probably] a catalyst for both the Fed and People’s Bank of China to remain on the offence with support,” said Oanda senior market analyst Edward Moya.
The JSE lost 0.67% to 66,976 points and the top 40 fell 0.7%. Industrial metals dropped 5.02%, resources 3.88%, precious metals 1.36% and banks 1.27%.
Platinum lost 0.8% to $1,004.94/oz and Brent crude fell 0.35% to $71.42 a barrel.
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