Rand On the Rebound
In the wake of reports of positive economic growth and activity despite the pandemic, markets are starting to rebound a little.
One of the short term winners is the SA Rand which has been making gains against the US Dollar (1.9%), Euro (1.2%) and Pound (1.3%). The currency has been outperforming several other international currencies on the back of recent positive domestic economic data.
‘The currency has been outperforming several other currencies’
The Rand is nearing the important level of R14/US$ and narrowed the gap to R14.18 this week. This is comparative to pre-pandemic levels, which is significant.
These gains however are tied to market reactions from this week’s Consumer Price Inflation (3.2%) which is marginally higher than that recorded in Feb 2021 (2.9%) due to rising fuel prices. The SA Reserve Bank (SARB) is normally happy to see the rate anywhere between 3% to 6%.
Fuel Prices Also On The Rebound
Fuel prices continue to sore as the oil producing countries hold back production to siphon off the massive overproduction and surplus produced when the pandemic first hit (and everyone stopped driving around). This will likely lead to the old familiar pattern of ever-increasing prices for fuel. This will negatively impact on the prices consumers pay for goods and groceries in the near future.
12 months ago, for the first time in history, the rate was actually below $0/barrel due to the onset of the pandemic. In fact, it dropped as low as minus (-)$40.32/barrel as companies struggled to pay to store the barrels and it began costing them to have the oil lying around not being used.
It is predicted that oil (now at $65/barrel) will soon be at around $70/barrel so get ready to spend more when you fill up in the next few months.