The Rand is no stranger to adversity but the past two days have been nothing short of brutal, and while no clear reason can be pinpointed it looks like a misunderstanding could be the cause of our aggressive selloff.??
These are the mid rates at 6:15 today:
Brent Crude = $77.10 per barrel
- Sensitive viewers look away now, the following exchange rate could be disturbing to some.?The Rand fell to R18.91 to the Dollar yesterday, our worst level since the height of the COVID panic in 2020, and suddenly our sideways drift for weeks in the R18.30’s seems like a million miles away.??
- The Rand is imploding all on its own with our fellow emerging market currencies mostly gaining on the Dollar yesterday thanks to a weaker Dollar Index.?And we haven’t just taken a little backwards step either, our fall has been precipitous with our Dollar rate trading at R18.29 on Monday but plunging to R18.91 by yesterday, a 62c fall at -3.4% in three days.?Ostensibly nothing has really changed other than Eskom confirming on Tuesday that there will be a 45 day delay in bringing Koeberg’s Unit 1 back online, but this only amounts to 920Mw, or roughly 1 stage of load shedding.?Our significant move weaker seems like an over reaction and there are suggestions that inaccurate reports on Eskom losing control of the grid could be to blame.
- The following is from MoneyWeb:??The Rand plunged to a three-year low on Wednesday after a steep drop in the previous day, while international and domestic government bonds also fell, as fears grew of scheduled blackouts known as load shedding worsening during winter. “SA bonds and the ZAR are underperforming their EM counterparts this morning,” Kieran Siney of ETM Analytics said in emailed comments. ETM Analytics said in a separate note on Wednesday morning that misleading headlines on Tuesday had sparked the market rout by giving “the impression that (Eskom) was losing control of the grid. SA is in trouble, the grid is under pressure, Eskom does face multiple threats, but none of this is anything new,” it said.
- The Rand has given up a lot of ground over the past two days, ground that will be difficult to make up until we get some positive news out of Eskom by the sounds of things, but at least we are not taking a double hit thanks to the Dollar also falling onto the back foot.?The international currency market was focused on yesterday’s US consumer inflation report with forecasts calling for no change at 5.0% between March and April.?The forecast was wrong and their CPI fell below 5% for the first time in over two years, although a move down to 4.9% was about as small a reduction as possible.?But a drop is a drop, and with April bringing the 10th?consecutive month of lower CPI readings that would have pleased the FED while hurting the Dollar.
- The following is from CNBC:??The Dollar fell against other major currencies on Wednesday on news that US inflation slowed more than expected, increasing the likelihood that the FED could pause its interest rate hikes. “There’s continued angst in the market that the FED isn’t finished hiking rates,” said Adam Button, chief currency analyst at Forexlive. “Even though the inflation report was only slightly lower than expected, you could see a sigh of relief in the market. And that meant selling the Dollar fairly aggressively. I think the market has been holding its breath ahead of this report.”
- Local market data today sees our mining and manufacturing production stats for March, out at 11:30 and 1pm respectively.??
- Possible USD mid rate trading ranges in the Rand today are R18.65 and R18.95.??