Guiding consumers since 2009

Local elections, international uncertainty: How will the rand respond?

By Andre Botha

As we dust off the Easter Holiday cobwebs, we enter the business end of the local election. This brings about a lot of local noise which could increase volatility in the rand. The market will look at any headline news which could lend short-term momentum to the rand after a period of range-bound trading. 

The rand has traded in a very narrow band in the past couple of weeks as a result of a lot of two-way directional pull in the market.

First off, we had the whole global growth fear which has been hogging headlines and has affected sentiment in a negative way. On the other side of the coin has been the news that the US-China talks have been going better than expected and that investors are looking at yield in riskier environments like the rand. 

One can easily follow that these forces cancel each other out which explains the lacklustre performance in the past few weeks.

Earlier this week we saw the US dollar on the front foot as the White House has scrapped waivers on Iranian oil to purchase the commodity. Iran has vowed to close the Strait of Hormuz, which is a major waterway for global oil shipments. We have seen the oil price rally on the back of this news.

Furthermore, the uncertainty that this latest act of the White House has brought about in the market looks to have strengthened the dollar as investors are running for a safe haven and Emerging Markets’ (EM) currencies are bearing the brunt of the latest bout of uncertainty.

The US dollar has broken below the 1.12 level against the euro after trading above 1.13 level at the back end of last week. 

The longer the Iran-US situation continues, the more uncertainty will be evident in the market and volatility in the rand and other EM's could become the norm again.

The rand will be in focus as it will have to contend with both international factors and the local elections in the coming weeks. The most significant data released this week will be the US 1st Quarter GDP number that will be out on Friday (26 April 2019).

With the new bolt of uncertainty in the market, we expect the rand to trade on the back foot this week, and the rand might need a weaker than expected GDP number from the US for sentiment to change. 

To catch up on today’s market commentary, have a look at the TreasuryONE blog which is updated daily. 

Recent Articles

Featured Raise a deposit for your house in 5 steps

If you’re a first-time home buyer, you could be lucky enough to be  approved for a 100% bond, but if you aren’t, a 10% deposit might be required. This  could be a daunting prospect.  However, a few financial tweaks to your lifestyle and spending habits could get you a foot in the property door and, once you’ve purchased a property, significantly reduce your long-term bond repayments.

Get personal with your finances – and tie the knot

As time passes, your financial products may not live up to your needs. Therefore, it’s important to take stock of what you’re paying for and adjust where necessary. We got in touch with financial advisers to find out how you can get your finances in order, and what you should do to ensure you’re financially stable.

Personal loan or business loan? The best way to finance your business

When starting your own business, you may have to rely on external funding. Perhaps you qualify for a personal loan, but would it be better to take out a business loan instead? We got in touch with a specialist to find out whether it’s best to take out a business loan or a personal loan to assist you with your ongoing business or start-up.

What to do when you’ve been denied a home loan

After months of scanning property sites and attending showhouse after showhouse, you’ve finally found what you’ve been looking for. But your dream of owning a home comes crumbling down when you receive the news that you’ve been denied a home loan. So, what now?


Cash Rewards up to 20% when you swipe your Absa Card at Spar

Price: Available on request
When: Daily
Where: Nationwide

The Royal Elephant Hotel Valentine's Day Special

Price: Available on request
When: 14 February 2020
Where: Centurion

Premier Hotels Vegan Dinner Special

Price: R225 per person
When: Monthly
Where: Nationwide