Latest news with #BiancaBotes
News24
10-06-2025
- Business
- News24
Rand shines against dollar, pound
For more financial news, go to the News24 Business front page. The rand strengthened to below R17.70/$ late on Tuesday, reaching levels last seen in October 2024. The local currency hit R17.6702, before retreating slightly to R17.70 in early evening trading. It has gained almost three percent over the past month. As recently as in April, the rand traded above R19.90/$ amid fears of a DA exit from the government of national unity (GNU). At the time, the rand was also hurt by a global sell-off of riskier assets amid the turmoil unleashed by US President Donald Trump's trade tariffs. 'Much of the rand's strength is due to a combination of improved domestic sentiment and external tailwinds,' says Bianca Botes, director at Citadel Global. 'The South African Reserve Bank's (SARB) strong stance on inflation, fiscal optimism following budget clarity, and inflows from foreign investors have all contributed to a more supportive environment for the currency.' SA's 10-year bond yield fell below 10% for the first time since 2022, signalling growing investor confidence, she adds. Apart from calm returning to the GNU and the friendly reception of Budget 3.0, the SA Reserve Bank's campaign to lower the inflation target to 3% (from a band of 3% to 6%) has bolstered the rand and bonds. Lower inflation will be positive for both assets, but a stricter target would also require stricter monetary policy. High interest rates make rand assets attractive to foreign investors looking to earn yield. Meanwhile, US rate expectations and easing inflation fears are shifting, with the Fed now only expected to delay its rate cut to September. On Tuesday, the rand also strengthened against the pound, reaching R23.87 — around its best levels since the start of April. Sterling slipped after new UK jobs data implied further weakness in the labour market, which could influence how quickly the Bank of England cuts interest rates. British wages rose by a slower-than-forecast 5.2% in the three months to April, pushing sterling down 0.4% against the dollar to $1.3499. The labour market data "puts a question mark on the hawkish bias that we've seen from the Bank of England," Danske Bank FX analyst Kirstine Kundby-Nielsen said. The BoE is due to meet next week and is expected to keep the interest rate unchanged. Money market traders are pricing in about 48 basis points of cuts by year-end, up from about 39 bps before the data. The dollar index, which measures the US currency against six others, was flat to slightly lower at 98.95, not far from a six-week low of 98.35 it touched last week. The index is down 8.7% this year as investors, worried about the impact of tariffs and trade tensions on the US economy and growth, fled US assets and looked for alternatives. Trade talks Traders were waiting for the outcome of talks between Beijing and Washington, which on Tuesday continued for a second day, amid expectations of a trade deal that could further ease trade tensions. Officials from the world's two largest economies were meeting in London to try to defuse a dispute that has widened from tariffs to restrictions over rare earths. "The dollar was better bid last night in Europe and Asia and it has come off here so I think we're consolidating," said Marc Chandler, chief market strategist, at Bannockburn Forex in New York, until an outcome from the trade talks is announced. He added that what's at stake in these negotiations are not just tariffs, but also export controls, and "that's going to be the basis for the quid pro quo." Chandler noted that there are the makings of a deal: US semiconductor chips for China's magnets and rate earths. But what should be noted, he said, is the asymmetry. "China can replace the chips that the US exports easier than we can replace their magnets and processed earths." US President Donald Trump and his Chinese counterpart Xi Jinping spoke by phone last week at a crucial time for both economies as signs of strain emerge from the former's cascade of tariff orders since January. Investor focus this week will be on the US consumer price index report for May, due on Wednesday. The report could give insight into the impact of tariffs, with investors wary of any flare-ups in inflation ahead of the Fed's policy meeting next week.
IOL News
09-06-2025
- Business
- IOL News
Rand strengthens below R17,70 amid budget optimism and a softer dollar
Having opened at R17.77 on Monday morning, it continued to trade around that level for the bulk of the day and was at R17.73 as of around 2.30pm. It was last at these levels around mid-December last year. Image: GCIS / File The rand is testing levels below R17.70 to the dollar on a range of factors that include persistent greenback weakness, renewed local confidence following the passage of the third iteration of the National Budget, as well as hints that the inflation target may be dropped to 3% instead of the current 3% to 6% range. Having opened at R17.77 on Monday morning, it continued to trade around that level for the bulk of the day and was at R17.73 as of around 2.30pm. It was last at these levels around mid-December last year. Bianca Botes, director of Citadel Global, explained that the weakening of the dollar has been the biggest short-term driver for the rand. 'When the dollar weakens, often due to softer US economic data or expectations of US interest rate cuts, the rand tends to strengthen,' she said. So far this year, the rand is 5.7% stronger against the dollar, leading the emerging market currency charge, said Botes. The dollar index is softer by 6.6% over the past six months, indicating the broad-based weakness of the currency, she added. Yet, Investec chief economist, Annabel Bishop, stated that the local currency was not gaining ground against the euro and pound. 'US dollar weakness has been driven by the volatility in US tariffs and uncertainty for the US economy and so global growth, as the US has hiked tariffs steeply then paused, or rolled them back, then re-embarked on tariff increases again in April,' she said. Nolan Wapenaar, co-chief investment officer at Anchor Capital, said that, 'perhaps most tellingly,' the weaker greenback, further de-escalation of the tariffs given recent trade talks as well as less political risk will help the local currency. Botes also noted that, as a commodity linked currency, the rand is sensitive to global product prices. 'The prolonged and drastic gold rally, coupled with a weak oil price, assisted the terms of trade and underscored the rand's strength,' she said. Johann Els, Old Mutual's chief economist, said that the rand is benefiting from the recent soothing of global trade tensions, the passing of the National Budget, easing of concerns that the DA won't walk away from the Government of National Unity as well as higher prices of those commodities that South Africa exports when compared with relatively low price of the country's main import of oil. Wapenaar explained that the rand has also strengthened because a 'sensible budget was passed, and tariffs have been paused and softened'. The South African Reserve Bank's (SARB's) cautious approach to interest rates, cutting rates less aggressively than expected, has helped support the rand by maintaining a favourable interest rate differential with the US, said Botes. 'Anticipated US rate cuts later in 2025 could further benefit the rand if local rates remain steady,' she added. 'We also note that the discussion of a 3% inflation target in South Africa is rand positive and should this progress, we will likely see further strength in the rand,' said Wapenaar. On announcing the decision of the Monetary Policy Committee to, as expected, drop the interest rate by 0.25 percentage points on May 21, SARB Governor, Lesetja Kganyago said that dropping the inflation target to 3% would result in South Africa being a low-inflation, low-interest rate country, which would bring with it economic growth. 'The renewed focus on a lower inflation target is also helping as this will not only reduce pressure on the rand, but also lead to lower interest rates over time,' said Els, adding that this would be beneficial for the economy, while also aiding in fixing government finances. 'I see further strength in the rand over the next few weeks and months, moving closer to R17, and potentially into the R16-handle territory on a short-term basis,' Els said. Bishop noted that the US dollar is expected to see further weakness this year, which would add to the rand's strength against the greenback, and the moderate nature of consumer price inflation, with another fuel price cut due this month. 'The rand's strength against the US dollar this year has contributed significantly towards lower inflation in South Africa,' she said. IOL
The Star
09-06-2025
- Business
- The Star
Despite 0. 1% growth in Q1, the rand held firm below R18 to the dollar
Nicola Mawson | Published 4 days ago As of lunchtime on Wednesday, it was trading at R17.83, remaining range bound in the tight R17.75 to R18.05 bracket, Andre Cilliers, Currency Strategist at TreasuryONE indicated. Bianca Botes, director at Citadel Global, noted earlier on Wednesday morning that the currency was at R17.85. Image: Pixabay Despite South Africa's economy growing at a measly 0.1% in the first quarter of this year, the local currency was unmoved and continues to trade at levels below R18 to the dollar. As of lunchtime on Wednesday, it was trading at R17.83, remaining range bound in the tight R17.75 to R18.05 bracket, Andre Cilliers, Currency Strategist at TreasuryONE indicated. Bianca Botes, director at Citadel Global, noted earlier on Wednesday morning that the currency was at R17.85. Cilliers said the dismal gross domestic product (GDP) data hasn't dented the local currency, with it taking its lead from a weaker dollar instead. Overall, Tuesday's print of GDP data was better than expected by several economists, most of which noted that this was due to the agricultural sector performing well. Nolan Wapenaar, co-chief investment officer at Anchor Capital, explained that much of the production data and economic data that had already been had been pointing to a poor GDP print. 'In some ways, agriculture saved the day for the GDP numbers,' he said. Maarten Ackerman, chief economist and advisory partner at Citadel, said that the 'latest GDP figure paints a familiar picture: a few resilient sectors keeping the economy afloat, while structural underperformance holds us back. Without meaningful and coordinated reform, the economy will continue to limp along, unable to meaningfully reduce unemployment or address pressing social challenges.' Wapenaar added that the rand was not really impacted by numbers that were as expected. Earlier this week, Investec chief economist, Annabel Bishop, noted that the rand 'is not expected to strengthen to its fair value of close to R16 until the fundamentals for economic growth improve in South Africa'. The rand had been benefitting from a weaker dollar, which Bishop had previously said was a deliberate trade tactic by US President Donald Trump. His vacillatory position on tariffs has led to several knee-jerk market reactions. Trump's latest move – which follows trade negations including with President Cyril Ramaphosa – was to double the tariffs on steel and aluminium from 25% to 50%. In a statement on the White House website, he said he was doing this 'so that such imports will not threaten to impair the national security'. Wapenaar said the rand's relative strength was 'also a case of the markets being rather preoccupied with the White House' and what is happening there, which means that other data prints are less impactful than they might otherwise be'. IOL
IOL News
04-06-2025
- Business
- IOL News
Despite 0. 1% growth in Q1, the rand held firm below R18 to the dollar
As of lunchtime on Wednesday, it was trading at R17.83, remaining range bound in the tight R17.75 to R18.05 bracket, Andre Cilliers, Currency Strategist at TreasuryONE indicated. Bianca Botes, director at Citadel Global, noted earlier on Wednesday morning that the currency was at R17.85. Image: Pixabay Despite South Africa's economy growing at a measly 0.1% in the first quarter of this year, the local currency was unmoved and continues to trade at levels below R18 to the dollar. As of lunchtime on Wednesday, it was trading at R17.83, remaining range bound in the tight R17.75 to R18.05 bracket, Andre Cilliers, Currency Strategist at TreasuryONE indicated. Bianca Botes, director at Citadel Global, noted earlier on Wednesday morning that the currency was at R17.85. Cilliers said the dismal gross domestic product (GDP) data hasn't dented the local currency, with it taking its lead from a weaker dollar instead. Overall, Tuesday's print of GDP data was better than expected by several economists, most of which noted that this was due to the agricultural sector performing well. Nolan Wapenaar, co-chief investment officer at Anchor Capital, explained that much of the production data and economic data that had already been had been pointing to a poor GDP print. 'In some ways, agriculture saved the day for the GDP numbers,' he said. Maarten Ackerman, chief economist and advisory partner at Citadel, said that the 'latest GDP figure paints a familiar picture: a few resilient sectors keeping the economy afloat, while structural underperformance holds us back. Without meaningful and coordinated reform, the economy will continue to limp along, unable to meaningfully reduce unemployment or address pressing social challenges.' Wapenaar added that the rand was not really impacted by numbers that were as expected. Earlier this week, Investec chief economist, Annabel Bishop, noted that the rand 'is not expected to strengthen to its fair value of close to R16 until the fundamentals for economic growth improve in South Africa'. The rand had been benefitting from a weaker dollar, which Bishop had previously said was a deliberate trade tactic by US President Donald Trump. His vacillatory position on tariffs has led to several knee-jerk market reactions. Trump's latest move – which follows trade negations including with President Cyril Ramaphosa – was to double the tariffs on steel and aluminium from 25% to 50%. In a statement on the White House website, he said he was doing this 'so that such imports will not threaten to impair the national security'. Wapenaar said the rand's relative strength was 'also a case of the markets being rather preoccupied with the White House' and what is happening there, which means that other data prints are less impactful than they might otherwise be'. IOL
IOL News
08-05-2025
- Business
- IOL News
Rand steadies as markets shrug off Fed hold and Vatican smoke signals
Following a temporary dip due to geopolitical tensions, the rand has rebounded, showcasing resilience against the dollar as markets digest the Fed's latest decisions Image: Picture: Henk Kruger/Independent Newspapers After Wednesday's wobble in the local currency, mostly the result of a fire fight between India and Pakistan, the rand reversed its losses, instead moving back to a position where it continues to gain ground against the dollar. This stabilisation comes despite the US' Federal Reserve holding interest rates steady, which seems to have been priced into valuations across markets even though the States' central bank may have scope to cut interest rates. Between its New York close and mid-morning on Wednesday, the local currency had dropped some 20c after having traded at the R18.15 level in New York on Tuesday night. On Thursday, however, the currency was increasing in strength, wand was in the R18.16 range – its lowest level in a month – just after lunch. Bianca Botes, Director at Citadel Global, stated that, although risk sentiment remains mixed, the rand opened steady at R18.22 on Thursday morning. Nolan Wapenaar, co-chief investment officer at Anchor Capital, said the last 24 hours were a non-event. 'Black smoke in the Vatican and a Fed hold were very broadly anticipated. The silence in conclave and as expected Fed commentary mean that we are business as usual,' said Wapenaar.
