Today’s market commentary from Andre Botha, Senior Currency Dealer at TreasuryONE:
The Rand weakened yesterday as the EM push from the past couple of weeks seems to have run out of puff. We have seen the dollar stronger this morning on the back of a weaker Euro as growth numbers of some countries in the single currency bloc have been disappointing, to say the least. We have seen broad-based risk-assets weakness as most of the major stock indices closed in the red as well. The Rand as is normally the case led EM currencies higher and was the weakest EM currency yesterday.
Tonight we have the SONA speech by President Ramaphosa, and we expect that the Rand direction at least in the short term will be affected by the address. The basic equation is very simple where a well-received SONA will help the Rand in the short term whereas a badly received address will see the Rand on the back foot heading to the budget speech on the 20th of February. Market players will watch with a keen eye on Rmaaphosa’s stance on State-Owned Enterprises and how he wants to attract foreign investment to South Africa. Expect the Rand to trade very erratically when the speech commences.