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Markets Wrap: Rand closes at R14.39/$

2019-03-07 08:49

President Cyril Ramaphosa announced in Parliament on Thursday, 7 March 2019, that South Africa is going to move ahead with the nationalisation of the South African Reserve Bank.


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Last Updated at 15:00
07 Mar 17:11

Rand/$ 14.3965

Euro/$ 1.1231

Rand/euro 16.1606

GBP/$ 1.3100

Rand/GBP  18.8450

Rand/AUD 10.1160

Rand/CAD 10.7143

Rand/CNY 2.1415

Rand/JPY  7.7503

Rand/CHF 14.2737

- TreasuryONE

07 Mar 17:06

The rand, with the rest of the emerging markets, is getting a little smack in late afternoon trade, as euro/$ is trading at 1.1230 - the low for 2019.

German 10-year bonds are also trading at levels last seen in 2016 on the back of the dovish ECB.

The rand/$ is testing the R14.40/$ level currently - TreasuryONE.

07 Mar 16:38

President Cyril Ramaphosa announced in Parliament on Thursday, 7 March 2019, that South Africa is going to move ahead with the nationalisation of the South African Reserve Bank.

The rand was trading weaker as a consequence and is currently priced at R14.34/$, according to Bianca Botes, corporate treasury manager at Peregrine Treasury Solutions. 

"The markets are perceiving this as undermining the SARB's independence which is largely negative for the local currency. The full extent and nature of President Ramaphosa's announcement will need to be analysed extensively to determine if government will have authority over the mandate of the SARB," said Botes. 

"The rand is demonstrating severe volatility and further potential depreciation is possible. The next important trading barrier for the rand will be at the R14.50/$ level."

07 Mar 14:07

MSCI urges China to ease ownership limits after dropping stock

MSCI said China should consider easing foreign-ownership restrictions in its stock market to prevent more companies from being dropped from its widely followed benchmarks.

New York-based MSCI said it will remove Han’s Laser Technology Industry Group from its China indexes after Friday’s close because the stock had reached the 28% ownership limit that halted buy orders.

Midea Group, which is also close to the ceiling allowed for overseas holdings, will see its weight adjusted due to concern over accessibility effective from March 11, the index provider said.

The two stocks dropped at least 3.1% at the close.The cap on foreign ownership has been set at a relatively low level, said Chin-ping Chia, head of Asia Pacific research at MSCI. "The regulators should explore the possibility to further boost that limit, if they want more participation of international investors in the market," he said.

China currently has no plan to raise limits on foreign holdings in stocks, Shanghai Securities News quoted Fang Xinghai, vice chairman of the China Securities Regulatory Commission, as saying.

"Reaching the limit is normal, investors can buy other shares that have not reached the limit," he said, according to the report. - Bloomberg

07 Mar 13:46

Stocks drop, dollar edges up as growth woes spread

Stocks were mostly lower Thursday as fresh cuts to economic forecasts added to investor concerns about the outlook for global growth. The euro held steady ahead of a rate decision by the European Central Bank, while the dollar edged higher for a seventh day.

Miners, dragged down by growth fears, weighed on the Stoxx Europe 600 Index ahead of Thursday’s ECB meeting in Frankfurt, where policy makers are said to be prepping a new round of bank funding to help stimulate the region’s slowing economy.

US futures declined as reports showed the country’s trade deficit widened to a 10-year high and private companies added fewer employees than analysts forecast last month.

In Asia, shares fell in Japan and Hong Kong, with China bucking the trend. Treasuries ticked higher while European bonds were mixed.Economic concerns have moved to the forefront once more, with ECB officials poised to cut forecasts a day after the Organisation for Economic Cooperation and Development said it downgraded almost every growth outlook for Group of 20 nations.

Investors will study the monthly U.S. jobs report on Friday for further clues. Trade remains in the picture with markets awaiting details of a possible accord, as President Donald Trump is said to be pressuring US negotiators to cut a deal with China soon.

“We’re seeing a slowdown in the economy, we’re seeing a slowdown in corporate earnings,” Oliver Pursche, chief market strategist at Bruderman Asset Management, told Bloomberg TV in New York.

“The market is waiting to see if things are going to turn out better or worse than they expect, and we just don’t know.”

Elsewhere, the pound dipped with European officials said to be pessimistic about the chances of a breakthrough in Brexit talks this week. Oil traded above $56 a barrel in New York as investors weighed a U.S. crude-stockpile surge that threatens to undermine OPEC’s bid to avert a glut against a drop in fuel inventories. - Bloomberg

07 Mar 12:11

South Africa's Q4 current account came in at 2.2% of GDP, bringing the total deficit of 2018 in at 3.5% of GDP, up from the 2.5% of GDP in 2017. 

The quarterly deficit was much smaller than the average 3.2% of GDP forecast by economists earlier surveyed by Reuters.

The USDZAR is trading on the backfoot today as the international market is selling of emerging markets, notes Andre Botha, senior currency dealer at TreasuryONE. "USDZAR tested R14.30 and is currently trading at R14.28," he said in a note to clients.

Brought to you by TreasuryONE.

07 Mar 10:43

Concerns of global growth raised their head again yesterday as the OECD cut forecasts again for the global economy as they stated that trade disputes and uncertainty over Brexit as the key drivers for lower growth, comments Andre Botha, senior currency dealer for TreasuryONE.

"As soon as uncertainty hit the markets EM currencies are normally hamstrung as there is a flight to safe-haven currencies which could be detrimental for EM's in the short term," says Botha.

Today we have the release of the South African Current Account as well as the ECB meetin, he notes. "The current account has shown a bias to widen in the past couple of readings and should that continue we can expect the Rand to lose a bit of ground. The ECB meeting is key this afternoon as the Euro could come under pressure should Mario Draghi continue with his dovish stance."

07 Mar 10:41

Saudi banks fall as investors fret over prospect of higher tax

Saudi Arabian banks dropped on concern that the government may double the current rate they pay under an Islamic tax.

The Tadawul Banks Index fell 1.1 percent as of 10:54 a.m. in Riyadh, as all but one of its 12 members declined. The gauge was set to end at the lowest level since Jan. 20. Al Rajhi Bank’s 1.7 percent drop was that biggest drag on the kingdom’s main stock gauge.

National Commercial Bank and Riyad Bank lost at least 1.5 percent.

The Saudi tax authority is talking to lenders about raising the religious levy, known as Zakat, potentially bringing it in line with the 20 percent rate paid by foreign banks, people familiar with the matter said, asking not to be identified because the discussions are private.

The talks are continuing and the final rate could be lower, they said.While the drop on Thursday trimmed the banking index’s one-year advance to 35 percent, that’s still more than twice the gain in the Tadawul All Share Index.

Saudi lenders have been rising as investors prepare for the stocks’ inclusion in FTSE Russell and MSCI Inc. emerging-market gauges. Saudi stocks will be added to FTSE’s index in stages starting this month. - Bloomberg

07 Mar 10:38

The Rand survived a very volatile day in relation to the Turkish Lira, comments Andre Botha, senior currency dealer at TreasuryONE. The Lira saw a see-saw day after the Turkish Central Bank kept interest rates at 24%. 

The fact that the Rand did not react badly to the roller-coaster in Turkey shows that the contagion effect that hit the markets last year was absent, Botha adds. 

07 Mar 08:49

There was "more of the same" this morning, with currencies treading water in the absence of fresh news on trade talks, TreasuryONE said in a morning note to clients.

This was ahead of the ECB policy statement today, and tomorrow's Non Farm Payrolls number.

The Euro is at 1.1306, the Pound at 1.3177 and the Rand weaker at 14.2678.

The Rand was hit by the weakening of the Turkish Lira after their central bank kept interest rates unchanged at 24%, TreasuryONE also noted, with Wall Street closing lower for the second day in a row, and Asian stocks lower this morning after the OECD lowered their global growth forecast.

Gold is unchanged at $1 286.45 while Palladium has recovered to $1 538.52. Brent is also higher this morning at $66.24. Brought to you by TreasuryONE.

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