Mon. Jan 20th, 2020

The Rand remains on a rollercoaster of volatility

Following the news of a major slowdown in Chinese and German growth, the Rand continued to weaken due to the heightened global growth risks.

the rand remains on a rollercoaster of volatility 1024x683 - The Rand remains on a rollercoaster of volatility

This Rand report is brought to you by Sable International

Last week’s poor global data is indicative of a worldwide economic rough patch.

Talk of another massive financial bailout for Eskom has put South Africa on thin ice with Moody’s. The country is said to be fighting a losing battle to keep its last remaining investment grade credit rating.

Foreigners have already begun dumping R2
billion worth of government bonds. This comes before what looks like an
imminent downgrade to junk status, which is placing a huge amount of pressure
on the local currency.

The subdued economic data is placing pressure on major central banks to take on a dovish stance. Analysts have said that the markets have already partially priced in three potential interest rate cuts by the Federal Reserve before the end of the year.

ced3495f 2019 08 20 the rand report - The Rand remains on a rollercoaster of volatility

On Wednesday, Jerome Powell and the Federal
Reserve will be releasing the meeting minutes after the Fed decided on a 25
basis-point rate cut in July. Thursday sees the start of the Jackson Hole Economic
Symposium. The symposium is used as a platform to foster open discussions about
important policy matters. Market participants will be keeping a close eye on this
exclusive conference.

On the local front, South Africa will be
releasing its year-on-year inflation rate for July. Market analysts have tipped
it to drop by 0.1% to 4.4%.

Market event calendar

Tuesday 20 August

  • Reserve Bank of Australia’s
    meeting minutes

Wednesday 21 August

  • South Africa’s inflation rate
  • Federal Reserve’s meeting

Thursday 22 August

  • Japan’s inflation rate
  • Jackson Hole Economic Symposium

Friday 23 August

  • Jackson Hole Economic Symposium

Dean Reich

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