Andre Botha from TreasuryOne joins us for the Market Update, our Weekly podcast for # eBizMoney
The Rand caught many off-guard yesterday, including myself, as it rapidly retreated all the way up to 13.70 even though the ABInBev/SABMiller deal was approved. The move looks to be a result of position squaring and profit-taking on the back of the approval and building up to the agreement the market must have been long Rand. That being said the bias and momentum could still favour the lower side as Asian risk assets gained this morning after a positive lead from Wall Street.
The informal meeting between OPEC and other major oil producers has surprisingly produced an agreement to cut production output to between 32.5m and 33m barrels a day. The market wasn’t expecting an agreement given the false hope provided by previous meetings. The output cap is slightly Rand negative, but the effect on the Trade Balance will only be felt further down the line.
On a negative note, there’s talk of South African Bond’s having their weighting decreased in the JP Morgan GBI-EM index which could translate into Rand outflows. Just the rumour is enough to dent our momentum to the lower side, but we’ll have to wait and see if the market takes much note.
For now, we look dazed after yesterday’s surprise rally, if the Rand can pull it together, we could move back into the lower 13.50’s. Otherwise, we’ll be range bound between 13.58 and 13.75.
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