Land debate haunts rand

Rand - [Google Images]

The rand heads into this week with a dark cloud of local politics hanging over it as the reaction from the land expropriation decision last week had a crippling effect putting the currency on the back foot for most of the week.

TreasuryONE chief currency dealer Andre Botha said it was likely that this issue would be at the top of the agenda for this week’s a cabinet meeting. 

“The market is waiting for some clarity regarding the issue and should the details continue to be murky we could see the rand on the back foot, as uncertainty plus emerging markets don’t gel,” said Botha

At 5pm the domestic currency was bid 11c weaker than Friday’s same time bid at R13.41 a dollar. Against the pound sterling the rand was 4c softer at R17.35 and to the euro, the currency eased 8c to R15.50.

“The rand remains on the back foot with pressure from politics, both locally and globally, likely to add to the currency’s woes. Efforts by the Chinese Central Bank to counter a rapid sell-off of the yuan by increasing the reserve requirement on forward positions assisted the Asian market, an effect that will filter through to emerging markets as a whole,” said Botes. Peregrine Treasury Solutions corporate treasury manager Bianca Botes said the land debate was causing some uncertainty in both local and global markets as no investor liked uncertainty and even less so in a time of a risk-averse global backdrop.

Dynamic Outcomes head market analyst and director James Paynter said while the expropriation without compensation debate kept uncertainty at a high, it would be more a question of what is happening on the international front this week. 

“Our analysis is showing a fairly clear picture for the foreseeable future, but as it is with any forecast, this is a question of getting the best picture based on the data available at this point. Overall, it looks like the rand may have some tricks up its sleeve this week,” he said.

JSE stocks were not spared with the blue-chip Top40 index giving up 0.4 percent to 50 784.44 points, while the broader all share index shed 0.45 percent to 56 861.21 points. 

Leading losses among major movers were, JSE which was 4.91 lower at R155 followed by Impala Platinum which fell 4.6 percent to R18.86. AECI declined 4 percent to R103.70, while Absa dropped 2.98 percent to R166.16 and Clicks gave up 2.85 percent to close at R190. 

Among top gainers were RCL Foods, which added 1.55 percent to R17, followed by PSG Konsult which was 1.33 percent higher at R9.89. Echo Polska Properties gained 1.08 percent to R18.69, while Spar grew 0.91 percent tp R194.01 and Richemont inched up 0.83 percent to end the day at R116.94.