President Cyril Ramaphosa’s SONA address last night once again highlighted the problems at SOE’s but gave little in the way of detail to the solutions. The President stated that South Africa suffered from stagnant growth, growing youth unemployment, power generation problems and unsustainable rising public debt. He announced plans for a sovereign wealth fund along with the establishment of a state bank.
The plan to split Eskom into three entities remains in place but he also said that load shedding was unavoidable while critical maintenance at power stations was being performed. We now await the budget speech in two weeks time for details on the financing of the governments’ plans.
The Rand is trading weaker at 14.9500 this morning as the Dollar remains strong with the Euro under pressure from concerns over growth in the Eurozone. We have German and Eurozone GDP data out later today. The Dollar is currently quoted at 1.0833 against the Euro and 1.3035 against the Pound. The Pound gained yesterday after the resignation of Chancellor Sajid Javid.
Wall Street and European stocks closed down on the day but Asian equity markets are trading higher with China’s halving of tariffs on US imports due to kick in today.
Gold is holding steady at $1 575.38, still benefitting from its safe-haven status. Oil is a touch higher at $56.35 after OPEC announced production cuts to counter declining Chinese and Global demand.
By Andre Botha, Senior Currency Dealer, TreasuryONE