Rand Report 13/03/2025

Good morning

If we thought that we were in uncharted territory when the initial 2025 Budget Speech was cancelled last month yesterday’s attempt at tabling a new/revised budget has pushed the boat out even further.? Very interesting times lie in our immediate future.??

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These are the mid rates at 7:15 today:?

USD = R18.34?

AUD = R11.57

GBP = R23.77

DXY = 103.56

EUR = R19.97

Brent Crude = $70.92 per barrel

Market News:?

·???????? We definitely saw some currency market volatility yesterday with the Rand opening at R18.32 to the Dollar before falling to R18.44 by the afternoon session.? But just when it was looking like a bad day for us things turned around and we managed to close the session back at R18.32.

·???????? High drama on the local front as Finance Minister Enoch Godongwana presented his revised 2025 Budget Speech which had the most noticeable change of VAT increasing by 0.5% this year and another 0.5% next year, down from the initially proposed 2% which was the reason why version 1 was cancelled, but the new budget has still not gone down well.? The ANC does not hold a majority in parliament for the first time in 30 years and the DA along with other members of the GNU have stated they will not sign this budget into law, so we 1) wait to see what negotiations transpire to get to an actual budget, and more importantly 2) wait to see if the GNU survives this standoff.? ?

·???????? Gondongwana was in a difficult spot with spending exceeding revenue but the staunch political pushback has come from a forced tax hike while the ANC is not only unwilling to trim spending, but rather they are increasing it.? The following from MoneyWeb points to some of the holes:??It is incomprehensible that R2 billion is budgeted for VIP protection, but SARS only gets R3.5 billion. The irony is tangible. The lack of economic growth is at the heart of South Africa’s fiscal crisis. Since 2010, GDP growth has averaged just 1.5%, with 2023 and 2024 registering rates of 0.7% and 0.6%, respectively. These figures indicate an economy that is stagnant at best, unable to generate the revenue necessary to support government spending or create jobs for millions of unemployed citizens.

·???????? Our budget headlines are far from over, and if we get a deeper political fallout that could be bad for the Rand, but fortunately our movements yesterday were actually driven by the Dollar which first strengthened, sending us to R18.44 in the process, but then weakened and we made it back to R18.32.? Dollar strength came as a result of the latest round of tariff headlines with Europe announcing retaliatory tariffs on $28bn worth of US goods to which Trump immediately said he would respond to, presumably with even higher tariff threats.? Political wrangling in Germany around their planned spending spree also dented the Euro and allowed the Dollar Index to climb.? ??

·???????? Fortunately the Dollar’s strength was short lived as a cooler than expected US inflation report was well received by the market, and after days of brutal selling equities finally enjoyed a bounce with the prevailing risk-on sentiment hurting the Dollar.? It has been pointed out that the February CPI report is the final report showing figures before any of Trump’s tariffs took hold, and as such it is not a reflection of where the market is today, but we’ll worry about that in a month’s time while enjoying a weaker Dollar right now.??

·???????? Local market data today sees our January mining and manufacturing stats at 11:30 and 1pm respectively.??

·???????? Possible USD mid-rate trading ranges in the Rand today are R18.20 and R18.50.

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