On Thursday evening news broke President Jacob Zuma had fired Pravin Gordhan as Finance Minister. The rand collapsed by more than 60 cents. Malusi Gigaba, who was previously the Minister of Home Affairs, has been appointed as his replacement. After a previous close of R13.038/$ on Wednesday, the rand had strengthened to a high of around R12.796/$ at 18:00. However, as rumours started to circulate, and were then later confirmed, the rand plunged to a low of R13.459/$ at 02:10 this morning. The local currency is currently trading at R13.49/$ level. Expect further weakness as European markets open.
The rand weakened dramatically on Wednesday, falling more than 50 cents, from a previous close of R15.238/$. It managed to hold its ground for most of the day, moving to R15.29/$ at 13:00. Nevertheless, it began to wobble in the run-up to Finance Minister Pravin Gordhan’s Budget Speech, and accelerated losses as the speech progressed. It’s tempting to blame the movement on disappointment over the SA Budget, but, it must also be noted, Moody downgraded Brazil’s sovereign rating to junk just as the Budget Speech began. It is very likely this exacerbated the losses as the EM currency basket took a hammering. After stabilising overnight, the rand is currently trading just below the R15.63/$ level.
Continue reading Rand tanks after Budget Speech
Yesterday saw the rand endure a volatile session after the South African Reserve Bank decided to increase the repo rate by 25 basis points to 6.25%. This comes after the governor cited concerns over a weak rand and rising inflation. From a previous close of R14.167/$, the rand moved to trade at a low of R14.212/$ at 15:10, just after the MPC meeting had started. However, at 15:30, the rand started to strengthen as it moved to trade R14.029/$ at 16:20. The rand continued to strengthen as the day progressed and was last trading at just below the R14.01/ $ level this morning. The word from bank FX desks is that market participants should use this dip to sell local currency.
Continue reading Rand stronger after SARB’s 0.25% hike
The rand weakened sharply against the dollar on Friday, as mixed U.S jobs data increased uncertainty about the timing of the next rate hike by the Federal Reserve. This comes after Non-Farm payrolls rose less than expected to 173,000 in August. However, a drop in the unemployment rate to 5.1%, from 5.3% previously, created some uncertainty as to how the Fed would interpret the latest release. After weakening substantially in the closing hours of the session, the rand finally closed the week off at R13.86/$, from a previous close of R13.56/$ on Thursday. This morning, the rand had weakened further as it traded slightly above the R13.88/$ level.
Continue reading The Rand Continues its Relentless Decline
Three weeks after incoming CEO, Chuck Robbins, took over from John Chambers, Cisco Systems reported its fiscal 4th quarter results. For the period, Cisco’s sales rose by 3.9% to $12.8bn, while profits increased by 3.2% to $3.2bn. This translated into a profit of $0.59 cents per share, 3 cents higher than analysts’ estimates. Cisco’s results, while quite modest, are reassuring considering that rival IBM saw earnings decrease by 0.7%, as well as a decline in revenue. In response to the results, Cisco’s share price added 2.87% during the normal session and 3.9% in after-hours trading.
Continue reading Cisco: All systems go
On Wednesday, Alibaba reported its slowest quarterly revenue growth in almost 3 years, sending its share price 5.12% lower to trade at $73.38. After trading at a high of $120 in November, China’s largest e-commerce group is now only trading 7.9% above its IPO price of $68. For the quarter ended June 30, revenues increased by 28% to $3.26bn, missing analysts’ estimates of $3.39bn. However, net profit more than doubled to $4.97bn, or $1.92 per share, mainly due to a gain on the deconsolidation of Alibaba Pictures. Excluding the once off items, earnings per share rose 21% to $0.59, slightly higher than expectations of $0.58.
Continue reading Alibaba Group: Above and below expectations
Fitch ratings agency decided to leave South Africa’s rating unchanged at BBB on Friday evening. It maintained its negative outlook and pointed to the weak GDP growth forecast (which is largely driven by continuing electricity supply constraints) as a key driver. It also cited the heavy reliance on the external funding of the current account deficit as a key risk. South Africa’s reliance on portfolio and debt inflows increases its vulnerability to emerging market uncertainty in the face of a hawkish Fed.