20°C / 22°C
  • Wed
  • 20°C
  • 6°C
  • Thu
  • 23°C
  • 6°C
  • Fri
  • 25°C
  • 9°C
  • Sat
  • 25°C
  • 8°C
  • Sun
  • 25°C
  • 8°C
  • Mon
  • 26°C
  • 10°C
  • Wed
  • 25°C
  • 9°C
  • Thu
  • 20°C
  • 12°C
  • Fri
  • 21°C
  • 11°C
  • Sat
  • 22°C
  • 11°C
  • Sun
  • 17°C
  • 11°C
  • Mon
  • 15°C
  • 9°C
  • Wed
  • 22°C
  • 8°C
  • Thu
  • 24°C
  • 8°C
  • Fri
  • 27°C
  • 8°C
  • Sat
  • 26°C
  • 9°C
  • Sun
  • 25°C
  • 8°C
  • Mon
  • 28°C
  • 11°C
  • Wed
  • 22°C
  • 7°C
  • Thu
  • 24°C
  • 7°C
  • Fri
  • 26°C
  • 8°C
  • Sat
  • 25°C
  • 6°C
  • Sun
  • 26°C
  • 8°C
  • Mon
  • 27°C
  • 7°C
  • Wed
  • 21°C
  • 13°C
  • Thu
  • 24°C
  • 14°C
  • Fri
  • 23°C
  • 14°C
  • Sat
  • 25°C
  • 13°C
  • Sun
  • 28°C
  • 17°C
  • Mon
  • 22°C
  • 15°C
  • Wed
  • 19°C
  • 9°C
  • Thu
  • 24°C
  • 14°C
  • Fri
  • 19°C
  • 12°C
  • Sat
  • 25°C
  • 12°C
  • Sun
  • 19°C
  • 13°C
  • Mon
  • 16°C
  • 12°C
  • Wed
  • 27°C
  • 9°C
  • Thu
  • 24°C
  • 10°C
  • Fri
  • 25°C
  • 10°C
  • Sat
  • 25°C
  • 13°C
  • Sun
  • 16°C
  • 8°C
  • Mon
  • 13°C
  • 7°C
  • Wed
  • 23°C
  • 12°C
  • Thu
  • 19°C
  • 13°C
  • Fri
  • 21°C
  • 12°C
  • Sat
  • 23°C
  • 15°C
  • Sun
  • 15°C
  • 9°C
  • Mon
  • 13°C
  • 9°C
  • Wed
  • 23°C
  • 10°C
  • Thu
  • 26°C
  • 9°C
  • Fri
  • 27°C
  • 11°C
  • Sat
  • 26°C
  • 9°C
  • Sun
  • 26°C
  • 9°C
  • Mon
  • 28°C
  • 9°C
  • Wed
  • 21°C
  • 5°C
  • Thu
  • 23°C
  • 5°C
  • Fri
  • 24°C
  • 6°C
  • Sat
  • 24°C
  • 6°C
  • Sun
  • 25°C
  • 8°C
  • Mon
  • 25°C
  • 9°C
  • Wed
  • 21°C
  • 11°C
  • Thu
  • 23°C
  • 9°C
  • Fri
  • 26°C
  • 7°C
  • Sat
  • 25°C
  • 7°C
  • Sun
  • 30°C
  • 6°C
  • Mon
  • 29°C
  • 9°C
  • Wed
  • 23°C
  • 8°C
  • Thu
  • 24°C
  • 11°C
  • Fri
  • 20°C
  • 10°C
  • Sat
  • 28°C
  • 11°C
  • Sun
  • 18°C
  • 10°C
  • Mon
  • 15°C
  • 8°C

Rand firmer as carry trade trumps political wrangling

At 1500 GMT the rand was 0.75% firmer at 13.8500 per dollar after closing at 13.9500 on Friday.

Picture: Supplied.

JOHANNESBURG - The rand rallied on Monday, brushing aside local political ructions as investors increased bets on further monetary easing by the European and US central banks.

At 1500 GMT the rand was 0.75% firmer at 13.8500 per dollar after closing at 13.9500 on Friday.

Most of those gains came in the latter part of the session, with offshore investors in particular lured by the rand’s healthy carry return. The European Central Bank is expected to lower its key deposit rate on Thursday while the US Federal Reserve is expected to cut rates on 31 Jul, prompting investors to look to high-yielding emerging markets assets.

The South African Reserve Bank (Sarb) cut its own key rate last Thursday but looks unlikely to ease further this year, and with inflation trending lower, the rand and local bonds have continued to draw buyers despite a political storm brewing around President Cyril Ramaphosa.

“Consumer prices, like the Sarb said last week, will remain subdued so the rand remains an attractive carry trade,” said trader at IG Markets Shaun Murison.

On Friday, the Public Protector said Ramaphosa had violated the executive ethics code over a donation to his 2017 campaign for the leadership of the African National Congress (ANC).

On Sunday Ramaphosa said he would go to court to overturn the finding.

“We know that anything that has to go through the judicial system takes a long time so the rand hasn’t been affected much. So far it’s been about how much the U.S. will cut rates,” said Murison.

Bonds were weaker, with the yield on the benchmark 2026 government paper up 1 basis point to 8.03%.

On the stock market, shares fell alongside emerging market equities, with companies earning in foreign currencies hit by the rand’s rally, while the introduction in China of a Nasdaq-styled index hurt existing indices.

The benchmark JSE Top 40 Index closed 0.4% down at 51,891 points while the broader All-Share Index also fell 0.4% to 58,015 points.

“The Chinese market’s relatively weak. And the rand’s a little bit stronger today as well, so that’s putting a little bit of pressure on the rand hedges at the moment,” said portfolio manager at Independent Securities Michele Santangelo.

Tobacco producers British American Tobacco (BATS) and Remgro were at the bottom of the blue-chip index, with BATS down 2.3% and Remgro slipping 1.7%.

Comments

EWN welcomes all comments that are constructive, contribute to discussions in a meaningful manner and take stories forward.

However, we will NOT condone the following:

- Racism (including offensive comments based on ethnicity and nationality)
- Sexism
- Homophobia
- Religious intolerance
- Cyber bullying
- Hate speech
- Derogatory language
- Comments inciting violence.

We ask that your comments remain relevant to the articles they appear on and do not include general banter or conversation as this dilutes the effectiveness of the comments section.

We strive to make the EWN community a safe and welcoming space for all.

EWN reserves the right to: 1) remove any comments that do not follow the above guidelines; and, 2) ban users who repeatedly infringe the rules.

Should you find any comments upsetting or offensive you can also flag them and we will assess it against our guidelines.

EWN is constantly reviewing its comments policy in order to create an environment conducive to constructive conversations.

comments powered by Disqus