Sun. Jul 12th, 2020

The rand rallies through interest rate cut and lockdown easing announced

(Partner Content) The Rand had a great week last week due to risk on sentiment as economies begin to ease lockdown restrictions globally.

the rand rallies through interest rate cut and lockdown easing announced 1024x683 - The rand rallies through interest rate cut and lockdown easing announced

The rand report is brought to you by Sable International

On Thursday, the SARB made the decision to cut the repo rate by a further 50bps, bringing the repo rate to 3.75. The rate cut comes after a 100bps cut in March and another 100bps cut in April. This did not stop the rand’s rally though, as the currency firmed 5.42% against the dollar and 4.83% against the pound last week.

dd6b6464 weekly rand report 26 may - The rand rallies through interest rate cut and lockdown easing announced
Image provided by Sable International

On Sunday evening, Cyril Ramaphosa announced that the lockdown will be eased from level four to level three nationwide, effective from 1 June. Both the interest rate cut and the lockdown easing will boost the productivity of South Africa as the interest rate cut will stimulate the economy and easing of restrictions will allow more of the population to get back to work. Analysts predict that the lockdown easing will allow up to eight million to return to work.

The rand has continued to strengthen in the new week gaining about 0.5% against the dollar and 0.2% against the pound. 

Market event calendar

Tuesday 26 May

  • US new home sales (MoM) for March: Expected at -21%

Thursday 28 May

  • Eurozone business confidence for May: Expected at -3
  • US durable goods orders (MoM) for April: Expected at -19%
  • US GDP growth rate (QoQ) Second est for Q1: Expected at -4.8%

Friday 29 May

  • Japan consumer confidence for May: Expected at 25.1
  • SA balance of trade for April: Expected at ZAR 1.8 billion
  • US personal spending (MoM) for April: Expected at -11.4%

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