Share

Paris attacks not helping rand

Cape Town - The Paris attacks have not helped the rand and emerging market currencies could have a torrid time this week, according to Wichard Cilliers, director and chief dealer at treasury services company TreasuryOne.

"The sentiment at the moment is for further rand weakness," said Cilliers. He added that internationally the US Federal Reserve can throw some extra wood on the hiking fire, with the release of its minutes of October.

"As we saw with the last meeting, a hawkish Fed will send the dollar stronger and emerging market currencies weaker. Should the Fed minutes be hawkish, which is expected, we can see the rand under further pressure," he said.

This week also brings the release of the South African CPI and the SA Reserve Bank's MPC meeting on Wednesday and Thursday respectively.

"Although CPI is expected to be below 5%, well within the inflation targeting band of Sarb, the real attention will be focused on Thursday interest rate decision," said Cilliers.

"A lot are riding on this decision whether the MPC wants to front-run the Fed and hike early or wants to protect the rand in a way and hike at this meeting. The other side of the coin is that the MPC sticks to policy and with inflation currently at acceptable levels, keep interest rates steady with a hawkish undertone, which will indicate a possible hike in January. At this stage, it seems that it is an each-way bet."

Cilliers said the huge elephant in the room is that these are not normal times in economics.

"With this being uncharted territory, anything is possible and this uncertainty has grabbed hold of the market. Thus the recent dollar strength, apart from the rate hike expectation, could also be seen as some safe haven play," he explained.

"With the dwindling economic growth and dovish comments from Draghi last week, it is expected that another bout of stimulus is around the corner. We might well have a situation of the US Fed hiking rates and the ECB adding more stimulus, which will have a great impact on the euro/dollar parity becoming a reality in the longer term.

We live in a world where facts and fiction get blurred
Who we choose to trust can have a profound impact on our lives. Join thousands of devoted South Africans who look to News24 to bring them news they can trust every day. As we celebrate 25 years, become a News24 subscriber as we strive to keep you informed, inspired and empowered.
Join News24 today
heading
description
username
Show Comments ()
Rand - Dollar
18.89
+0.3%
Rand - Pound
23.87
+0.1%
Rand - Euro
20.39
+0.2%
Rand - Aus dollar
12.32
+0.1%
Rand - Yen
0.12
+0.2%
Platinum
908.05
0.0%
Palladium
1,014.94
0.0%
Gold
2,232.75
-0.0%
Silver
24.95
-0.1%
Brent Crude
87.00
+1.8%
Top 40
68,346
0.0%
All Share
74,536
0.0%
Resource 10
57,251
0.0%
Industrial 25
103,936
0.0%
Financial 15
16,502
0.0%
All JSE data delayed by at least 15 minutes Iress logo
Company Snapshot
Editorial feedback and complaints

Contact the public editor with feedback for our journalists, complaints, queries or suggestions about articles on News24.

LEARN MORE
Government tenders

Find public sector tender opportunities in South Africa here.

Government tenders
This portal provides access to information on all tenders made by all public sector organisations in all spheres of government.
Browse tenders