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 Financial conflict can lead to divorce – here’s how to prevent it

Talking about money is an intimate matter, and it may be uncomfortable for couples who’ve managed to avoid this discussion. However, it will become necessary at some point or other. Do you think you’re ready to talk to your partner about money?

This is how much you should spend on accommodation

As your salary changes over time, your expenses will change too. But what if you’re spending an exceedingly large percentage of your income on accommodation? Is it feasible or even recommended in our current stressful financial climate?

How to be “future greedy” with passive income

Setting up numerous streams of income is a safe way to protect yourself from the loss of your main stream of income. Better yet, setting up passive streams of income will ensure you always have money coming in, without costing you additional working hours. So, what is “passive income”, and how can you earn this?

Can your debt be cancelled?

It sometimes happens that you struggle so much to pay your debt that you think of asking your creditor to write it off. But debt doesn’t just get written off. There are conditions that must be met and procedures that must be followed before the creditor cancels your debt.



FNB senior customers can earn up to 30% back in eBucks at Clicks

Price: Available on request
When: From 5 August 2020
Where: Nationwide

Bakwena Spa Women’s Day Special

Price: R549 per person
When: Until 31 August 2020
Where: Centurion, Hartbeespoort, Kuils River

Dis-Chem Pap Test Special

Price: R180
When: From 3 August to 11 September 2020
Where: Nationwide

Latest Guide

Guide to debt rehabilitation solutions