On Thursday last week, Ramaphosa announced that the country will be going into a level four lockdown, allowing more industries to operate. Following the announcement, the Rand strengthened about 1.1% on Friday. The South African government has put a plan in place that will allow the county to phase in industries at different levels of lockdown and eventually bring South Africa back to some sort of normal life.
On Tuesday last week, Ramaphosa unveiled a R500 billion support package to support the economy amid the pandemic. The markets reacted negatively towards the announcement as the government is relying on the International Monetary Fund, World Bank and New Development Bank to finance R95 billion of the support package. On Friday, Finance Minister Tito Mboweni amended the combined fiscal and monetary package to over R800 billion. While we are seeing a large inflow of liquidity, we need to keep in mind that South Africa will be experiencing a large outflow as the country is to make its exit from the World Government Bond Index on Thursday.
With the optimism of the phased easing of lockdown attracting investors and the idea that South Africa needs to borrow from the big global banks to finance its huge stimulus package, pushing investors away, the fate of the Rand is in the hands of investors’ discretion.
Market event calendar
Tuesday 28 April
- US CB consumer confidence for April: Expected at 88
Wednesday 29 April
- Eurozone business confidence for April: Expected at -1.24
- US Fed interest rate decision: Expected at 0.25%
Thursday 30 April
- China NBS manufacturing PMI for April: Expected at 47.6
- Japan consumer confidence for April: Expected at 22.3
- Eurozone GDP growth rate (YoY) flash Q1: Expected at -3%
- SA balance of trade for March: -R15 billion
- US personal income (MoM) for March: Expected at -1%