The rand largely held onto Monday’s gains but was off its intraday best levels due to volatility in the dollar in thin trade.
The rand gained more than 2% on Monday on news that President Cyril Ramaphosa had emerged victorious in the race to lead the ANC for a second term. On Tuesday it touched an intraday best level of R17.2406/$ and at 5.27pm was trading 0.38% firmer at R17.2934/$. It had gained 0.31% to R21.0172/£, while easing 0.18% to R18.4026/€.
TreasuryONE strategist Andre Cilliers said the rand’s strength seemed to have run its course for now in the face of the dollar’s volatility against other major currencies. “The optimism and positivity regarding Ramaphosa’s victory is still there, but we are seeing much lower volumes in the week before Christmas and that lends itself to volatility for the rand,” he said.
News of Ramaphosa’s re-election as ANC leader came as a relief to the markets, which had priced in the risk of a return to power of the Zuma-influenced radical economic transformation (RET) faction, Sasfin said in a note on its website.
The rand has advanced back to the sub-R17.50/$ level, with the market embracing the prospect of policy continuity and hoping for more reform progress, it said.
“President Ramaphosa’s victory clears the way for a cabinet reshuffle. Depending on his picks, the rand could recover further and break back below the R17/$ handle in the near term, especially if the new cabinet fosters hope for an intensification of much-needed economic reforms,” Sasfin said.
“However, for now, it may be prudent not to turn overly optimistic about the economy’s prospects until material reform action is seen, especially since SA Inc continues to suffer high levels of load-shedding,” Sasfin analysts wrote.
Looking ahead to next year, Celliers also sees the rand a little bit stronger in January and February.
“I see it below R17/$, consolidating around the R16.75 area, but that will also depend on what happens to the dollar. I think we will see some rand strength in early 2023.”
On a day when there was a dearth of major local corporate news, the JSE closed slightly weaker. The all share index shed 0.43% to 73,040 points while the top 40 index gave up 0.51%. Industrials were the main driver, with the index down 0.75%.
Shares in Steinhoff recovered some of Monday’s losses when it reached a record low of 34c in intraday trade. Last week the beleaguered retail holding company said its main debtholders would take majority control of the group, leaving shareholders with no more than 20% but as little as nothing at all. The shares closed 11.76% higher at 57c.
Global stock markets were mixed after a policy tweak by Japan’s central bank rattled investors already worried about the economic fallout of rising interest rates and stubborn inflation.
Reuters reported the Bank of Japan (BOJ) widened the allowable band for long-term yields to 50 basis points either side of its 0% target, from 25 basis points previously. The policy decision caused an immediate spike in the yen.
At 5.40pm the Dow Jones industrial average was up 0.42%, while London’s FTSE 100 was 0.31% higher. France’s CAC 40 was 0.21% lower and Germany’s DAX 30 shed 0.32%.
Gold prices jumped above the key $1,800 level on the BOJ’s move. At 5.27pm spot gold was 1.76% firmer at $1,817.70/oz, while platinum added 3.21% to $1,008.90. Brent crude rose 0.26% to $80.34 a barrel.
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