The rand was weaker along with the emerging market peers on Wednesday, while the JSE was firmer amid mixed global markets as investors digested a weaker economic growth outlook.
The International Monetary Fund (IMF) followed the World Bank in slashing its global growth forecast, by the most since the early months of the Covid-19 pandemic, and projected even faster inflation, in the wake of Russia’s invasion of Ukraine and China’s renewed Covid-19 lockdowns.
The IMF also lowered SA’s GDP forecast for 2022 and 2023 to 1.9% and 1.4%, respectively.
Infrastructure damage in KwaZulu-Natal, as a result of the flooding, has dampened the economic outlook for the country, while load-shedding adds to the sombre mood.
“Local headwinds and the strong dollar have eventually shown the rand’s vulnerability and weakness,” said TreasuryONE currency strategist Andre Cilliers. “The IMF lowering of SA’s GDP forecast for 2022 and 2023, along with the impact of the flooding in KwaZulu-Natal and the extremely fragile power grid, are weighing on the rand,” he said.
The local currency weakened by just more than 2% on Tuesday, briefly trading around R15/$ — the lowest level in a month, but closed the session at R14.95/$.
At 10.25am on Wednesday, the rand had weakened 0.76% to R15.06/$, 1% to R16.286/€ and 0.99% to R19.591/£. The euro was 0.26% firmer at $1.0817.
In morning trade, the yield on the R2030 fell one basis point to 9.9%. Bond yields move inversely to prices.
At 10.25am, the JSE all share had gained 0.16% to 73,949.42 points and the top 40 0.11%. Banks had added 1.43%, financials 1.28% and industrials 0.54%. Precious metals had lost 2.17%, resources 1.09% and industrial metals 0.76%.
At the same time, London’s FTSE had gained 0.21%, France’s CAC 40 0.48% and Germany’s DAX 0.28%.
Earlier in Asia, the Shanghai Composite lost 1.35% and Hong Kong’s Hang Seng 0.4%, while Japan’s Nikkei gained 0.86%.
Gold lost 0.33% to $1,943.64/oz and platinum 1.76% to $977. Brent crude was up 0.59% to $107.71 a barrel.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.