Over the past week there has been a fair amount of data released for the South African economy. On Wednesday, we saw the release of retail sales data for September which was 1.1% better than the previous month but less than the 5% anticipated. The South African Reserve Bank (SARB) made its final interest rate decision for the year in its Monetary Policy Committee (MPC) meeting held on Thursday. The MPC concluded that no further interest rate changes would take place this year and the repo rate is to remain at 3.5%.
Ratings agencies Moody’s and Fitch have sent the economy further into junk status. Both agencies have downgraded the economy by one notch, while maintaining a negative outlook for the country. Moody’s has underlined that further weakening of South Africa’s fiscal position can be expected while Fitch has highlighted rising unsustainable government debt along with weak growth and extremely high inequality. Both ratings agencies have shown their concern for the country’s fiscal position during these times. However, ratings agency Standard & Poor’s has kept its ratings unchanged with a stable outlook.
The downgrades would obviously have had quite a negative impact on the Rand, but another vaccine candidate emerged, successfully mitigating the ratings effect. Oxford University and AstraZeneca have reported that their vaccine candidate has up to 90% efficacy.
In the week to come, we can expect to see the Rand affected by any news updates regarding Covid-19 vaccines as well as any progress made on Brexit.
In terms of local data, the inflation rate for October as well as the business confidence index for the fourth quarter is set to be released tomorrow.
Market event calendar
Wednesday 25 November
- South Africa: Inflation Rate (YoY) Oct: Expected at 3%
- South Africa: Business Confidence Q4: Expected at 27
- US: GDP Growth Rate (QoQ) 2nd est Q3: Expected at 33.1%
- US: Durable Goods Orders (MoM) Oct: Expected at 0.8%
- US Personal Spending (MoM) Oct: Expected at 0.5%
- US Personal Income (MoM) Oct: Expected at 0.5%
Thursday 26 November
- GER: GfK Consumer Confidence Dec: Expected at -2
Friday 27 November
- FR: GDP Growth Rate (QoQ) Final Q3: Expected at 18.2%