Latest news with #AnnabelBishop
Reuters
07-07-2025
- Business
- Reuters
South African rand slumps after Trump's tariff threat on BRICS-aligned countries
JOHANNESBURG, July 7 (Reuters) - South Africa's rand fell on Monday as markets reacted to U.S. President Donald Trump's threat to impose additional tariffs on BRICS-aligned countries, while also awaiting updates on country-specific levies ahead of Washington's looming July 9 deadline. Trump said on Sunday in a post on Truth Social that countries aligning themselves with what he called the "anti-American policies" of BRICS will be charged an extra 10% tariff, adding that there will be no exceptions to this policy. At 1144 GMT, the rand traded at 17.7450 against the dollar , down about 1% from Friday's close and paring some of its recent gains. South Africa, which is part of the BRICS group, said on Monday that it is not anti-american and that the group of developing countries should be seen as a push for "reformed multilateralism, nothing more". "The additional 10% BRICS tariffs would add further drag to South Africa's export competitiveness," said Annabel Bishop, Investec's chief economist. As a result, she said, the rand is expected to remain volatile for the rest of the month and early August. Trump said the U.S. is close to finalising several trade pacts in the coming days and will notify other countries of higher tariff rates by July 9, set to take effect on August 1. Trump imposed a 31% tax on U.S. imports from South Africa in April as part of his global tariff policy and Pretoria has been trying to negotiate a trade deal since May, when the U.S. leader hosted President Cyril Ramaphosa for talks in the White House. South Africa aims for a deal that would exempt some of its key exports from the tariffs, including autos, auto parts, steel, and aluminium in exchange for buying liquefied natural gas from the United States over a 10-year period. "SA still has a significant bargaining position if one focuses on the mining industry and some of the rare earth minerals that the country can provide over and above its position as the world's largest platinum producer," ETM Analytics said in a research note. The Johannesburg Stock Exchange's Top-40 index (.JTOPI), opens new tab was last down 0.1%. South Africa's benchmark 2035 government bond was weaker, with the yield up 9.5 basis points at 9.835%.
IOL News
03-07-2025
- Business
- IOL News
South Africa's consumers brace for rising prices as inflation returns
South Africa's consumer inflation rate is expected to climb above the lower bound of the Reserve Bank's 3% to 6% target range in July, after remaining below it for three consecutive months. The Consumer Price Index (CPI) came in at 2.8% year-on-year in May. According to Investec chief economist Annabel Bishop, the rate is likely to rise to 2.9% in June and 3.1% in July. The change is largely attributed to the fading impact of base effects from 2024 and higher prices for administered services. As a result of growing risks to inflation, Bishop said the Reserve Bank is unlikely to cut interest rates at the MPC meeting this month, having cut by a full percentage point since September last year. She explained that the recent fuel price hike will add 0.1 percentage points to inflation in the July print. Statistics South Africa will release CPI data on July 23. Bishop noted, however, that there may be another cut in November, which could take the prime lending rate down to 10.5%. As the inflation rate is likely to end the year at 4%, she said SARB may cut the rate even further, which would take prime down to 9.5%.
IOL News
30-06-2025
- Business
- IOL News
South Africa's markets gain momentum as rand strengthens and trade surges
In early Monday trading, the rand strengthened by 0.5%, recovering to R17.70 against the US dollar, reversing some of the pressure it faced last week. Image: Pixabay South Africa's financial markets began the week on a cheerfully optimistic note, buoyed by a weakening US dollar and a fresh wave of stability within the Government of National Unity (GNU). In early Monday trading, the rand strengthened by 0.5%, recovering to R17.70 against the US dollar, reversing some of the pressure it faced last week. This upward momentum comes as the greenback continues to lose ground, spurred by an easing of tensions in the Middle East, leading investors to take on more risks rather than retreating to safer havens. Economic data from the South African Reserve Bank unveiled promising figures: money supply growth rose to 6.86% in May, up from 6.12% in April, along with a modest increase in credit growth to 4.98% from 4.60%. Such indicators provide essential insights into consumer demand, suggesting strengthened economic activity. Moreover, South Africa's trade performance in May has presented promising figures, with a widening trade surplus of R21.7 billion—up substantially from a revised R13bn in April. This significant increase was driven by a robust export performance, which saw a 6.3% rise, culminating in a six-month high of R176bn. Shipments comprising precious metals, particularly gold and platinum, along with a variety of agricultural products such as citrus fruits, have contributed significantly to this positive trend. On the flip side, imports experienced a more subdued increase of 1.2%, amounting to R154bn. The demand was predominantly for mineral products, including crude oil and base metals. Notably, declines in certain categories, such as vegetable products and machinery, offset some of these gains. Despite the rand's recovery, Investec's chief economist, Annabel Bishop, pointed out that the currency remained under pressure against the euro and the pound. Currently, the rand trades at R20.83 to the euro against an average of R20.11 year-to-date, and R24.33 to the pound, as compared to a year-to-date average of R23.87. 'The rand is likely to average near R18.00/$1 in the third quarter of 25, if not stronger, but much depends on the policies from the Trump government, and in particular the reactivation of many of the Liberation day US trade tariffs in early July,' Bishop said. 'The Democratic Alliance (DA) has said it will remain in the GNU, while polls have shown loss of President [Cyril] Ramaphosa as ANC president sees the party fall towards 20% voter support. The rand has ignored the latest political spat, following global market movements.' Political dynamics also play a role in shaping market sentiments, particularly following a weekend of intense negotiations surrounding the GNU. The Democratic Alliance (DA) has opted to remain part of the coalition despite expressing dissatisfaction with President Cyril Ramaphosa's Cabinet decisions, notably the dismissal of Andrew Whitfield as deputy minister of trade, industry, and competition. Although the DA has pledged to abstain from certain budget votes, their choice to stay within the coalition has helped stabilise the rand, which has seemingly remained insulated from political turbulence. Andre Cilliers, currency strategist at TreasuryONE,remarked on the DA's recent actions, stating that their frustrations have had minimal impact on the rand's performance. 'The DA is so frustrated that it won't support parts of the government budget and says talking more is pointless. The rand opened this morning back in the mid-R17.70s, stronger than it closed on Friday. The currency will await international data this week to get some impetus,' Cilliers said. Meanwhile, the JSE All Share Index surged 0.9% to 96 706 points during early trade on Monday, bouyed by investments, logistics, healthcare, and manufacturing stocks. BUSINESS REPORT
News24
05-06-2025
- Business
- News24
Rand hits strongest level in months
• For more financial news, go to the News24 Business front page. The rand was trading below R17.74/$ on Thursday afternoon, the local currency's best level since December last year. It has gained almost 3% over the past month. The dollar has been under renewed pressure this week as disappointing labour data fuelled concerns about the US economy. Investors are also worried about how new tax cuts will worsen that country's debt crisis. The rand has now strengthened by more than R2 against the dollar since April, when it traded above R19.90/$ amid fears of a DA exit from the Government of National Unity (GNU). At the time, the rand was also hurt by a global sell-off of riskier assets amid the turmoil unleashed by US president Donald Trump's trade tariffs. Since then, sentiment has improved somewhat, bolstering riskier assets like the rand, as the US has been amenable to reducing tariffs through negotiations, says Investec chief economist Annabel Bishop. The survival of the GNU, and the well-received third iteration of the Budget, have underpinned rand strength in recent weeks. On Wednesday, the 10-year government bond yield reached its strongest level in more than three years, falling below 10% after parliament's finance committee voted in favour of the National Treasury's fiscal framework. This paves the way for Budget 3.0 to be adopted by Parliament. In addition, the SA Reserve Bank's campaign to lower the inflation target to 3% (from a band of 3% to 6%) has also bolstered the rand and bonds. Lower inflation will be positive for both assets, but a stricter target would also require stricter monetary policy. High interest rates make rand assets attractive to foreign investors looking to earn yield. Bishop said that the Reserve Bank's interest rate cut last week triggered 'mild' rand weakness, as the interest rate difference between SA and the US narrowed somewhat. The market is expecting two rate cuts of 25 basis points each in the US this year, but these are only anticipated from the final quarter of 2025. 'However, further US interest rate cuts are built into market expectations for 2026 and 2027, allowing for further rand strength against the US dollar in the period,' said Bishop. In the near term, however, rand strength may be limited. Markets tend to become more risk-averse as the Northern Hemisphere's summer approaches and many traders reduce their investments in riskier assets over the period while they are on holiday, Bishop added. She says the rand's fair value (typically based on factors like trade, inflation differences and interest rates) was close to R16/$, but it is not expected to strengthen to that level until the fundamentals for economic growth improve in South Africa. As revealed this week, the economy grew by only 0.1% in the first quarter this year, with sharp contractions in mining and manufacturing. 'Persistent weak economic growth in South Africa tends to be a disincentive for foreign investors, along with the rand's depreciation trend,' said Bishop. While there has been foreign interest in local bonds, global investors remain sellers of SA shares. On Thursday, the rand gained slightly against the euro as the European Central Bank cut interest rates by a quarter point for the seventh time in a row, leaving the bank's rate at two percent. SA's repo rate is at 7.25%. The rand was trading at R20.29/euro on Thursday afternoon. It started the year at around R19.50.
IOL News
27-05-2025
- Business
- IOL News
Likely interest rate cut next week brings thousands in savings, but higher rates could follow
Economists agree that the South African Reserve Bank (SARB) will drop interest rates at its meeting next week, with an announcement expected on Thursday at 2pm. However, future cuts could be scuppered if the inflation target is dropped. Image: Pixabay Economists agree that the South African Reserve Bank (SARB) will drop interest rates at its meeting next week, with an announcement expected on Thursday at 2pm. However, future cuts could be scuppered if the inflation target is dropped. The rate at which SARB lends to local banks is currently 7.5%, with banks generally lending at 11% to consumers, unless they are not high risk, in which case borrowers can get a rate that is below prime. Based on calculations using ooba homeloans' online tool, a homeowner will save R2 040 over a year if they have a R1 million home they are paying off over the standard 20-year period. These calculations have been worked out on an interest rate of 11% and then 10.75%, which is in line with others freely available on the internet. Interest rate effects on home and car repayments. Image: IOL Taking the average price of a car in South Africa of R400 000, the annual saving will be R612 – using an Auto Trader calculator with the same prime rate figures as for a home, although the results would be the same with any other calculator that can be found online. The Bloomberg consensus is for a 0.25 percentage point cut. Investec chief economist, Annabel Bishop, noted that 'lengthy signalling of a lowering of the inflation target, but no announcement, has also led to expectations of an interest rate cut'. Andre Cilliers, currency strategist at TreasuryONE, said the SARB's Monetary Policy Committee 'is expected to cut rates by 25bps given the recent inflation data and strong recovery in the rand'. Meanwhile, Old Mutual chief economist, Johann Els, has previously said that he expected an interest rate cut, also of 25 percentage points, next week on the back of a stronger rand. The currency opened at R17.89 on Tuesday morning, a level at which it has been lingering after breaking through R18. Casey Sprake, economist at Anchor Capital, has previously told IOL that the latest inflation data, of 2.8% as of April, strengthens the case for monetary easing. 'We expect SARB to cut the repo rate by 25 basis points at its upcoming MPC meeting on May 29,' she added. However, a lower 'inflation target risks scuppering interest rate cuts this year,' warns Bishop. As a result, she said that 'with a change to the inflation target reportedly occurring soon this year, the SARB could choose to cut interest rates this month to avoid the limitation of doing so in the future but then could easily be at risk of needing to reverse the cut.' Bishop noted that the inflation rate target, currently between 3% and 6%, is likely to be lowered, with the Reserve Bank having said that this is imminent, although the Finance Department is responsible for changing the target.
