Tue. Sep 22nd, 2020

Rand Report: ZAR faces a long road to recovery

(Partner Content) Despite a historic contraction of the GDP for the second quarter, the rand gained through the last week on the back of positive risk sentiment.

rand report zar faces a long road to recovery 1024x683 - Rand Report: ZAR faces a long road to recovery

The rand report is brought to you by Sable International

On Tuesday, South Africa printed its second quarter GDP growth rate which had expectations of contracting by a staggering 40%, but the actual figure checked in at 51%, meaning the South African economy more than halved throughout the second quarter of the year. The ZAR, along with emerging markets, has benefited from global risk sentiment which will remain the key driver for the rand for the remainder of the year. Disappointments are likely to persist and shape the sluggish recovery for the South African economy as a crumbling infrastructure and concerns about debt levels plague the Rainbow Nation. Eskom continues to hinder the already shaky economy as the creaking electricity grid struggles due to years of below-par management and poor maintenance.

ae4a940c rand report graph 20 09 15 - Rand Report: ZAR faces a long road to recovery
Image credit: Sable International

Global factors are going to drive the rand and its emerging market compatriots this week. Brexit is at the forefront of the news again after Boris Johnson had his divorce deal pass its first hurdle on Monday, despite some disagreement among senior members of his own party. This means that the Internal Market Bill will be pushed to the next stage in parliament on Tuesday. The bill will rewrite some of the Withdrawal Agreement with a focus on maintaining the UK’s economic and political integrity. The Federal Reserve’s interest rate decision along with its press conference and economic projections on Wednesday should shed some light on how the US economy is coping and what the Central Bank’s plans are moving forward.  

Market event calendar

Tuesday 15 September

  • Australia: RBA meeting minutes
  • China: Retail sales, industrial production, unemployment data
  • Germany: ZEW economic sentiment index
  • UK: Employment data

Wednesday 16 September

  • New Zealand: Current account
  • US: Retail sales
  • Europe area: Balance of trade
  • UK: Inflation data

Thursday 17 September

  • Australia: Labour force
  • New Zealand: Second quarter GDP
  • US: FOMC meeting, jobless claims
  • UK: Bank of England interest rate meeting

Friday 18 September

  • UK: Retail sales
  • Europe area: Current account
  • US: Current account

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