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Johannesburg – The rand retreated on Thursday, surrendering early gains as investors remained cautious on commodity currencies despite Opec's deal to curb crude output.
At 08:45, the rand traded 0.3% weaker at R13.66/$ after an overnight close of R13.62/$.
The Organisation of the Petroleum Exporting Countries (Opec) agreed to curb oil production on Wednesday, but a lack of details regarding the deal has strangled commodity currency gains.
“Even though SA is an importer of oil, it joined in the rally… as it is an exporter of numerous natural resources,” explained Umkhulu Consulting’s Adam Phillips on Thursday. “Just like the rand is linked to the movement in the euro, it tends to strengthen on a better oil price. A higher oil price is generally positive for riskier assets…”
“The surprise agreement by oil producers to limit production is a mild rand negative,” said RMB’s John Cairns on Thursday. “The deal has spurred global market gains, which could help the rand today, but remember that SA is a net oil importer. The deal anyway is far from being meaningful. Opec members will have to agree on limits at their November meeting — and they then have to keep to them.”
Growth in credit demand by South Africa's private sector slowed to 6.15% year-on-year (y/y) in August from 6.78% in July, central bank data showed on Thursday.
Expansion in the broadly defined M3 measure of money supply quickened to 5.48% y/y in August compared to 4.41% growth in July.
Yield for the benchmark government bond due in 2026 was up 1 basis points to 8.65%.
