- Rand weakened to 18.4 from 18.2
- This was despite inflation cooling down to 6.3%
- South Africa’s strong attachment to Russia and the power crisis remains the elephants in the room
Harare- The South African Currency, the Rand weakened to 18.4 against the greenback on the 22nd of June 2023, down from a one-month high of 18.2 despite a respite from inflationary pressures and a weaker dollar.
The dollar index traded at 102 on the 22nd of June, holding losses from the previous session and hovering near its lowest levels in six weeks as Federal Reserve Chair Jerome Powell said there was a possibility of furthwr interest hike. The remarks came despite cooling inflation figures in the United States. On the 21st of June, the US dollar was 16% lesser than other major currencies too, an opportunity the Rand failed to exploit.
Besides a weaker dollar, South Africa’s consumer inflation cooled to 6.3% year-on-year in May from 6.8% in April, the best performance in 13 months, edging closer to the upper end of the South Africa Reserve Bank's target of 3% to 6%.
Meanwhile, the JSE FTSE All Share index extended losses for the 4th straight session trading below the 75,100 level, tracking a sour mood across international markets. Resource-linked sectors, industrials and financials were among the worst performers.
The Rand crisis tilts more to political toxicity between the US and South Africa. Stronger alignment of the latter with Russia is raising fears of possible SWIFT sanctions on South Africa and expulsion from AGOA.
The negative Rand sentiment is further exacerbated by the national grid failure and the ESKOM woes continue to persist.
However, a weaker Rand means Zimbabwean companies can import more with their US Dollars while on the other hand, it reflects a deceleration in remittances.
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