Last week, the South African rand opened at R17.79 against the US dollar. Throughout the week, the rand fluctuated, slipping to R18.02 and gaining as much as R17.59, influenced by economic releases that affected both the rand and the dollar.
On Monday, the dollar saw significant gains as investors anticipated South Africa’s Q2 GDP data, with expectations that it would follow the disappointing first quarter. Investors believed that production and employment had not improved enough to signal a strong economic recovery. Their concerns were confirmed on Tuesday when Statistics South Africa released data showing that GDP grew by only 0.4% for the April to June quarter, falling short of the 0.5% forecast. Despite higher consumer spending and improved power availability, sectors like agriculture, mining and transport experienced output declines. While the economy remains sluggish, there is hope that future data releases could show signs of improvement. The rand closed at R17.97 on Tuesday.
On Wednesday, the rand strengthened as US job data revealed a slowing labour market, with job openings reaching a three-and-a-half-year low in July. This decline suggested that the Federal Reserve might consider a significant interest rate cut. Domestically, a survey showed increased business confidence in South Africa during the third quarter, driven by optimism around the coalition government and a more stable electricity supply. Thursday saw the rand open at R17.82 and continue to gain as investors leaned towards riskier assets, betting on a US interest rate cut.
By the end of the week, the rand dropped slightly from a low of R17.60 to close Friday at R17.83. Additionally, South Africa’s 2030 government bond reached its strongest level in almost three years, with the yield down 1.5 basis points to 8.99%, reflecting growing investor confidence in the local market.
Upcoming market events
Tuesday, 10 September
- GBP – Unemployment rate
Wednesday, 11 September
- GBP – GDP growth rate
- USD – Inflation data
Thursday, 12 September
- EUR – Interest rate decision
- USD – PPI
Friday, 13 September
- USD – Michigan consumer sentiment
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