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Stronger GDP figures lift rand

Mar 06 2018 12:21
Jan Cronje

Cape Town - The rand strengthened by 8 cents to the dollar on Tuesday morning, after Stats SA announced that SA GDP in 2017 grew at a higher rate than predicted. 

The South African economy grew by 1.3% in 2017 compared to 2016, exceeding National Treasury’s expectation of 1% growth announced during the National Budget Speech in February, Statistics SA said on Tuesday.

At 11:45 the rand was trading at R11.76/$. 

The local currency was trading at R11.83/$ at 10:15 on Tuesday before the GDP figures were announced, after opening at R11.83 to the dollar. 

In a snap note TreasuryONE said the rand also firmed on news that the ANC had withdrawn a Parliamentary motion to debate the nationalisation of the SA Reserve Bank.  

The motion was withdrawn on Tuesday morning, shortly before the GDP figures were announced. 

Before the GDP growth rate was announced, the rand had been steady in early trade.

It had strengthened on Monday afternoon in the wake of Finance Minister Nhlanhla Nene's statement that SA had done enough to stave off a ratings downgrade by Moody's.

“Finance Minister Nene came out Monday and positively stated that the budget speech and recent winds of change would be enough to stave off a ratings downgrade by Moody’s on the 23rd of March,” said Andre Botha, a dealer at TreasuryONE in a statement on Monday morning, before the GDP figures were published. 

“Markets indeed took this in their collective stride, and we saw the Rand rallying back from the R12.00 level to close the day in the low R11.80's.”

Botha said the rand was also helped by news from the US that both Republicans and Democrats had largely dismissed the idea that they will follow President Donald Trump into a trade war. 

“This lifted some uncertainty in the market, and we have seen emerging market currencies firming up against the US dollar that went on a bit of a slide in late afternoon trade,” he said. 

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nhlanha nene  |  markets  |  gdp  |  currencies  |  rand  |  sa economy

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