The rand extended the previous session’s losses on Friday, on track for a three-day losing streak as the local focus remains on election voting outcomes.
With more than 50% of the votes counted by the Electoral Commission of SA (IEC), the governing ANC is set to lose its electoral majority in three provinces, with its support concentrated in mostly rural provinces.
The ANC’s support in the economic hubs of Gauteng and KwaZulu-Natal has drastically declined by more than 15 percentage points, with voter support for uMkhonto WeSizwe party (MKP), led by former president Jacob Zuma, breached the 40% mark in KwaZulu-Natal.
In Gauteng, ANC support is hovering at about 33%, trailed closely by the DA at 30%
“The rand retreats as coalition dynamics spook investors. Projections that the ruling ANC party will not win a parliamentary majority and be forced into a coalition are unsettling the markets,” TreasuryOne currency strategist Andre Cilliers said.
“Fears the ANC could join up with either the non-investor-friendly EFF party or the surprise package, the MK party, are weighing on the currency,” he said.
At 10.10am, the rand had weakened 0.57% to R18.8472/$, having touched an intraday low of R18.90/$. It weakened 0.53% to R20.4206/€ and 0.55% to R23.9672/£. The euro was little changed at $1.0832.
Globally, investors are awaiting the release of the personal consumption expenditure (PCE) index data for April later in the day, which is the Federal Reserve’s preferred measure of inflation.
Economists polled by Bloomberg expect a 2.7% year-on-year increase for core PCE, down slightly from the 2.8% gain in the previous read.
“Markets now await the Core PCE inflation number, anticipating some cooling but still far from the Fed’s 2.0% target,” added Cilliers.
At 10.25am, the JSE all share had weakened 0.14% to 77,143.81, while the top 40 was little changed.
At the same time in Europe, the FTSE 100 had gained 0.3%, while France’s CAC 40 and Germany’s DAX were little changed.
Gold was little changed at $2,342.43/oz, while platinum lost 0.14% to $1,033.41/oz. Brent crude was 0.15% firmer at $81.96 a barrel.
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