South Africa’s rand weakened in early trading on Friday due to a stronger dollar and rising oil prices, which negatively impacted risk sentiment.
Global markets were also closely monitoring the final day of the summit between US President Donald Trump and China’s Xi Jinping.
The rand was trading at 16.6426 against the dollar, which represents a decline of about 1% from its previous close.
The US dollar strengthened against a basket of currencies and was on track for its largest weekly gain in over two months.
Global oil prices rose by more than 1% after Trump announced that China was interested in purchasing oil from the US.
Concerns also persisted over ship attacks and seizures in the Strait of Hormuz, despite Iran stating that around 30 vessels had successfully passed through the waterway.
Like other risk-sensitive currencies, the rand often reacts to global developments. It has been particularly vulnerable to market sentiment since the onset of the US-Israeli conflict with Iran at the end of February.
In early trading, South Africa’s benchmark 2035 government bond also showed weakness, with the yield increasing by 1 basis point to 8.765%.
On Saturday, 16 May, the rand was trading at R16.69 to the dollar, R22.25 to the pound, and R19.41 to the euro. Gold is trading lower at $4,540.49 an ounce, while oil prices were at $109.3 a barrel.
5 important things happening in South Africa today
Good news for Capitec customers: Home Affairs Minister Leon Schreiber announced that passport and first-time smart ID applications will soon be available at bank branches as part of a digital partnership program. Capitec, which didn’t participate in the original pilot, has already launched the service in 76 branches as of the end of April. [MyBroadband]
R80 billion down the drain: The Department of Transport (DoT) announced that it is effectively pulling the plug on South Africa’s bus rapid transit (BRT) network, despite investments totalling over R80 billion across the past two decades. [Daily Investor]
Expected petrol price for June: South African fuel users are finally in for a bit of a break in June, but the good news is being undercut by the end of the government’s tax relief provided in April and May. Petrol price recoveries are currently between -13 and -19 cents per litre, while diesel prices have shown a much more positive swing, though they still reflect market volatility. [BusinessTech]
Private sector to step in to help failing water boards: South Africa’s struggling water boards, essential to water security, will have their turnaround plans reviewed by private-sector experts as the government seeks to stabilise them. [Business Day]
Motorists could be forced to pay more: South African motorists could face paying more to use the country’s roads in the future, with Transport Minister Barbara Creecy warning that widespread tolling may become necessary to maintain them. [BusinessTech]
