The rand was on track to reverse the previous session’s losses on Friday morning, but volatility remains amid uncertainty around the government of national unity (GNU).
The local currency has lost almost 2% in the past 24 hours to trade back up to R18.50/$ again, largely driven by news that there was a big disagreement between the ANC and DA, and the DA could walk away from the GNU over cabinet posts that were initially agreed on.
“The impasse in negotiations between the ANC and DA and the possibility of a GNU which excludes the DA has put the rand under considerable pressure,” said TreasuryOne currency strategist Andre Cilliers.
At 10.35m, the rand had strengthened 1.46% to R18.1956/$, 1.52% to R19.4638/€ and 1.49% to R23./£. The euro was 0.11% weaker at $1.0696.
Globally, investors are looking ahead to the release of May’s personal consumption expenditures (PCE) data, the US Federal Reserve’s preferred inflation gauge, later on Friday. Markets are hoping the index will show signs of moderation in US inflation, which will support the case for monetary policy easing. The consensus is that the PCE data will show inflation eased to 2.6% in May, after a reading of 2.7% in April.
“If the PCE data falls short of expectations, stagflation concerns will dominate the headlines and weigh on sentiment. But if the estimates prove accurate or even suggest slower growth, it could help calm market nerves and pave the way for a smoother transition into July,” said FXTM senior research analyst Lukman Otunuga.
At 10.40am, the JSE all share had gained 0.76% to 79,573.30 points and the top 40 0.47%.
At the same time in Europe, the FTSE 100 had added 0.39% and Germany’s DAX 0.53%, while France’s CAC had lost 0.42%.
Earlier in Asia, the Shanghai Composite was down 0.9% and Japan’s Nikkei gained 0.53%. Hong Kong’s Hang Seng was little changed.
In the commodities market, gold was little changed at $2,328.38/oz, while platinum gained 0.88% to $1,002.10/oz. Brent crude was 0.86% firmer at $85.99 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.