This week has been marked by significant events affecting both the local currency and the global landscape. From the attempted assassination of Donald Trump to Joe Biden stepping down from the presidential race, alongside a global internet outage, investors sought refuge in safer assets like established currencies. Consequently, the rand depreciated in value.
The week began with the rand at its strongest level since August 2023, opening at R17.90 to the dollar. Following the assassination attempt on Donald Trump in Pennsylvania on Saturday, the South African trading desk opened with a strong push towards the dollar. The daily high reached around R18.28, nearly 40 cents above the opening. A market correction saw a drop of about 11 cents before Monday’s close. On Tuesday, the political tensions had eased, and the rand rebounded to nearly R18 to the dollar. This was impressive given the Republican National Convention’s attempts to capitalize on the weekend’s events. The rand’s recovery was primarily driven by poor US sales data showing zero retail sales growth as consumers faced financial struggles.
By midweek, the situation reversed as the dollar gained due to a 0.7% drop in South African retail sales compared to the previous month. The market remained stable, anticipating an unchanged interest rate from the ECB. The weekly high of R18.36 was tested on Friday after a global internet outage that disrupted airlines, healthcare providers, financial services and manufacturers. This outage highlighted the fragility of our interconnected virtual infrastructure, leading investors to move away from emerging market currencies. The rand closed the week at R18.25. Despite the challenges, the rand’s performance could have been worse.
With Biden confirming his exit from the presidential race and endorsing Kamala Harris, the coming months promise to be volatile for emerging markets.
Upcoming market events
Wednesday, 24 July
Thursday, 25 July
- USD: GDP growth rate
- USD: Jobless claims
Friday, 26 July
- USD – PCE price index growth
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