The rand drifted lower, affected by the spike in global risk appetites amid the turmoil in the global banking sector.
At 10am on Monday the rand was standing at R18.42 to the dollar, R22.43 to the UK pound and R19.62 to the Euro.
According to Nedbank’s Economic Monitor, a spate of domestic data reflected surprising resilience in the face of unprecedented load-shedding.
The report also noted that mining output, manufacturing production, and retail sales also rose significantly in January compared with December.
It should be noted that global equity markets remained under pressure as the contagion fears from the US bank failures intensified.
“Some calm returned to the US markets after the authorities provided enormous support to the banking sector, but European bourses suffered as the troubles spread to Swiss bank Credit Suisse”, according to Nedbank.
US inflation eased in line with expectations. Headline inflation moderated to 6% in February from 6.4%. However, core inflation was stickier, only easing to 5.5% from 5.6%.
The European Central Bank (ECB) hiked its policy rate by an aggressive 50 basis points (bps) to 3.5% to counter persistently high inflation.
China’s industrial production and retail sales figures for January and February show that activity improved after the lifting of Covid restrictions. However, growth rates remained remarkably moderate given last year’s low base.
Reserve Bank may hike rates again
In a Bloomberg report, Sanisha Packirisamy, an economist at Momentum Investments said that SA policymakers nearing the end of the interest-rate hiking cycle may increase the the benchmark by 25 basis points.
Packirisamy says this could be done to mitigate potential risks to SA’s inflation outlook.
SA banking sector stocks
SA’s banking stocks were lower amid a sudden crisis of confidence in the banking sector, which has led US and European shares lower.
In morning trade on Monday shares in Standard Bank fell 3.1% to R160.43; Nedbank down 3.12% at R205.36; FirstRand fell 2.85% to R59.69, Absa 2.11% lower at R168.09; Capitec fell 2.24% to R1564.17, while Investec was .89% lower at R94.76.
The selloff in banks was sparked last week by the collapse of SVB Financial.
Reuters reports the US Federal Reserve on Sunday said it had joined with the Bank of Canada, Bank of England, Bank of Japan, European Central Bank and Swiss National Bank in a coordinated action to enhance the provision of liquidity through the standing USdollar swap line arrangements.
The move came on the heels of a deal brokered by Swiss authorities to have UBS UBSG.S buy rival Swiss bank Credit Suisse to prevent its disorderly collapse and signals the depth of concern central bankers have over the recent turmoil in the financial system on both sides of the Atlantic.
BUSINESS REPORT