CROSS BORDER PAYMENT SPECIALIST – FOREX RATES
These are the mid rates at 6:10 today:
| USD = R19.00 | AUD = R12.17 |
| GBP = R24.20 | DXY = 103.39 |
| EUR = R20.68 | Brent Crude = $85.46 per barrel |
The Rand managed to close last week on the front foot, and in so doing carve out the smallest of weekly gains. Things weren’t looking good as we opened the day at R19.07 to the Dollar and quickly fell to R19.15, but the afternoon session saw a turnaround in our fortunes with a run to R18.93 before we closed at R18.94 for the weekend.
Our gains against the Dollar on Friday are somewhat curious as not much changed on the international front, with concerns over China along with speculation on elevated US interest rates remaining in play. The Dollar Index ticked higher from 103.38 to 103.62 as its intra-day best, a move that would generally see the Rand give up ground, but we managed to buck the trend with a break below R19.00 while holding onto most of our gains by the end of the day.
South Africa will enjoy the week in the international spotlight as we host the latest BRICS summit between Tuesday and Thursday. While it’s impossible to predict just how this will impact the Rand it appears that our delegation will be pushing for increased trade agreements across the bloc while also positioning SA as a destination for outsourced manufacturing projects. South African President Cyril Ramaphosa expressed support for an expansion of the BRICS group of emerging market powers, which will gather for its annual summit in Johannesburg this week. “An expanded BRICS will represent a diverse group of nations which share a common desire to have a more balanced world order,” Ramaphosa said in a televised address to the nation on Sunday. The summit will be attended by United Nations Secretary-General Antonio Guterres and more than 30 African heads of state, as well as others from the Global South.
With any luck we’ll see the announcement of initiatives that will bolster our GDP and job creation, and these could pull through into a stronger Rand.
The following is from Business Day: Chair of the SA chapter of the BRICS Business Council Busisiwe Mabuza said it will propose BRICS partners consider outsourcing or relocating parts of their industrial production to SA, where they will find new export markets facilitated by the African Continental Free Trade Area (AfCFTA), particularly in agriculture and the automotive, pharmaceutical and logistics industries. She said relocation and outsourcing would work as SA is a preferred location for multinationals looking to access markets in Africa and for those looking to take advantage of the AfCFTA, the world’s largest free trade area spanning 47 African countries with a combined 1.3-billion population and GDP totalling $3.4-trillion.
While summits abound this week we must also keep our eye on Wednesday’s July consumer inflation print as CPI has been the primary driver of the SARB’s interest rate hiking cycle since late 2021. Consumers and businesses alike would be happy to see CPI fall from 5.4% to 5.0% as predicted, and therefore strengthen bets that the SARB will not need to lift interest rates any higher. But this development could be Rand negative given how the FED is still talking about further rate hikes if needed.
Chinese property developer Country Garden has been removed from Hong Kong’s Hang Seng stock index after saying it expected to post a steep loss and miss bond payments, another sign of China’s real estate woes worsening and a threat to oil demand. Foshan, Guangdong-based Country Garden warned of “significant uncertainties” in bond payments on 16 August after missing payments on dollar-dominated bonds this month, raising investor concerns the company could default on its bonds next month. Earlier in the month it said it expected to post a net loss of about Yn45-55bn in the first half of the year,
Asian markets stumbled on Monday after China delivered a smaller cut to lending rates than markets had counted on, continuing Beijing’s run of disappointing stimulus steps. China’s central bank trimmed its one-year lending rate by 10 basis points and left its five-year rate unmoved, a surprise to analysts who had expected cuts of 15 basis points to both. Disappointment at the meagre move saw Chinese blue chips ease 0.3 per cent, while the Australian dollar took a dip as a liquid proxy for China risk.
No local market data today.
Possible USD mid rate trading ranges in the Rand today are R18.85 and R19.15.
SPORT
As part of their first World Cup title, Spain will be taking home a historic prize pool. With FIFA increasing prize money totals throughout the tournament, Spain will receive a $10.5 million payday after defeating England 1-0 in the World Cup final on Sunday. FIFA provided $110 million in bonus money for the 2023 women’s tournament, a 260% increase on the previous edition.
In MotoGP Brad Binder the KZN boy finished 2nd. Well done.