{"id":67942,"date":"2024-06-06T13:21:13","date_gmt":"2024-06-06T13:21:13","guid":{"rendered":"https:\/\/www.africa-press.net\/south-africa\/all-news\/hidden-force-boosting-the-rand"},"modified":"2024-06-06T14:51:07","modified_gmt":"2024-06-06T14:51:07","slug":"hidden-force-boosting-the-rand","status":"publish","type":"post","link":"https:\/\/www.africa-press.net\/south-africa\/all-news\/hidden-force-boosting-the-rand","title":{"rendered":"Hidden force boosting the rand"},"content":{"rendered":"

Africa-Press – South-Africa. <\/strong><\/span>While still not good, improved economic data from China has boosted the value of the rand as investors see increased demand for local commodities from the world\u2019s second-largest economy.<\/p>\n

This is feedback from Stanlib chief economist Kevin Lings, who gave an overview of South Africa\u2019s apparent economic resurgence over the past few months.<\/p>\n

While many have focused on polls predicting the outcome of the country\u2019s national election, Lings said other factors are behind the country\u2019s improved economic performance.<\/p>\n

These include positive reforms at state-owned enterprises (SOEs), particularly Transnet\u2019s swift turnaround and the expected improvement in service delivery during the run-up to the election.<\/p>\n

South Africa\u2019s longest period without load-shedding since 2021 has also boosted its financial markets.<\/p>\n

However, Lings said there is a hidden factor behind the rand\u2019s appreciation versus the US dollar over the past few months. The currency has strengthened just below 5% compared to the greenback.<\/p>\n

This factor is the steady improvement in economic data from China, suggesting the world\u2019s second-largest economy may come out of its post-pandemic slump.<\/p>\n

\u201cIt\u2019s not as if China is doing fantastically well,\u201d Lings said. \u201cIt\u2019s just that at the end of last year, China seemed to be in significant trouble, but during the course of this year, they\u2019ve initiated a number of reforms.\u201d<\/p>\n

Overall, these reforms have improved investor confidence in China and have stimulated its economy.<\/p>\n

\u201cThat\u2019s helped to get a better feel around Chinese economic performance during the course of this year and into next year,\u201d he said.<\/p>\n

This improved confidence in the Chinese economy has lifted commodity prices as it is the largest importer of many of the world\u2019s minerals.<\/p>\n

As a large commodity exporter, this benefits South Africa, with expected improvements in foreign currency earnings and economic growth, boosting the rand\u2019s value. The rand may get another unexpected boost in the coming months, with some central banks looking to cut interest rates, potentially making local fixed-income assets, particularly government debt, more attractive to investors.<\/p>\n

This is feedback from Old Mutual Wealth investment strategist Izak Odendaal, who outlined why some emerging markets may cut interest rates before the US Federal Reserve does.<\/p>\n

Odendaal said there is some hope for the local currency in the near future as its emerging market peers appear set to cut rates even before the Fed.<\/p>\n

He said there is a notable exception to the usual Fed story among emerging markets this time around.<\/p>\n

Many emerging economies have adopted floating exchange rates, built up foreign exchange reserves and reduced foreign borrowing.<\/p>\n

This makes them more resilient to the Fed\u2019s movements and allows them to cut rates if their local inflation drops sufficiently \u2013 without waiting for the Fed to cut first.<\/p>\n

Some emerging markets hiked rates aggressively and early, even before the Fed got going in 2022, giving them a headstart in the fight against inflation.<\/p>\n

These countries, including Brazil, Chile and Hungary, are now in a position to cut rates as domestic inflation has declined, even though the Fed has yet to move lower.<\/p>\n

\u201cAs they cut, South Africa\u2019s short-term interest rates no longer seem relatively low in the peer group, and that should take some pressure off the rand,\u201d Odendaal said.<\/p>\n

As its emerging market peers cut their rates, the interest rate differential will increase between them and South Africa\u2019s.<\/p>\n

In turn, the yield on their government debt and other fixed-income assets will move lower while South Africa\u2019s remains high \u2013 making them relatively more attractive to investors hungry for yield.<\/p>\n

This should result in money flowing into the country, strengthening the rand.<\/p>\n

For More News And Analysis About South-Africa<\/a> Follow Africa-Press<\/a><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

Africa-Press – South-Africa. While still not good, improved economic data from China has boosted the value of the rand as investors see increased demand for local commodities from the world\u2019s second-largest economy. This is feedback from Stanlib chief economist Kevin Lings, who gave an overview of South Africa\u2019s apparent economic resurgence over the past few […]<\/p>\n","protected":false},"author":84,"featured_media":67941,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2,5],"tags":[274,315,275],"class_list":["post-67942","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-all-news","category-economy","tag-africa-press","tag-africa-press-south-africa","tag-south-africa-2"],"yoast_head":"\nHidden force boosting the rand - South Africa<\/title>\n<meta name=\"description\" content=\"While still not good, improved economic data from China has boosted the value of the rand as investors see increased dem ...\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.africa-press.net\/south-africa\/all-news\/hidden-force-boosting-the-rand\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Hidden force boosting the rand\" \/>\n<meta property=\"og:description\" content=\"While still not good, improved economic data from China has boosted the value of the rand as investors see increased dem ...\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.africa-press.net\/south-africa\/all-news\/hidden-force-boosting-the-rand\" \/>\n<meta property=\"og:site_name\" content=\"South Africa\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/AfricaPressTunisiaa\" \/>\n<meta property=\"article:published_time\" content=\"2024-06-06T13:21:13+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2024-06-06T14:51:07+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/static.africa-press.net\/south-africa\/sites\/31\/2024\/06\/sm_1717672769.911785.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"1024\" \/>\n\t<meta property=\"og:image:height\" content=\"576\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"cfeditoren\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"cfeditoren\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"3 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\/\/www.africa-press.net\/south-africa\/all-news\/hidden-force-boosting-the-rand#article\",\"isPartOf\":{\"@id\":\"https:\/\/www.africa-press.net\/south-africa\/all-news\/hidden-force-boosting-the-rand\"},\"author\":{\"name\":\"cfeditoren\",\"@id\":\"https:\/\/www.africa-press.net\/south-africa\/#\/schema\/person\/068c7ab4e9634ae78ec5d54ec46598bb\"},\"headline\":\"Hidden force boosting the rand\",\"datePublished\":\"2024-06-06T13:21:13+00:00\",\"dateModified\":\"2024-06-06T14:51:07+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\/\/www.africa-press.net\/south-africa\/all-news\/hidden-force-boosting-the-rand\"},\"wordCount\":621,\"commentCount\":0,\"image\":{\"@id\":\"https:\/\/www.africa-press.net\/south-africa\/all-news\/hidden-force-boosting-the-rand#primaryimage\"},\"thumbnailUrl\":\"https:\/\/static.africa-press.net\/south-africa\/sites\/31\/2024\/06\/sm_1717672769.911785.jpg\",\"keywords\":[\"Africa Press\",\"Africa Press-South-Africa\",\"South-Africa\"],\"articleSection\":[\"all news\",\"economy\"],\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"CommentAction\",\"name\":\"Comment\",\"target\":[\"https:\/\/www.africa-press.net\/south-africa\/all-news\/hidden-force-boosting-the-rand#respond\"]}]},{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.africa-press.net\/south-africa\/all-news\/hidden-force-boosting-the-rand\",\"url\":\"https:\/\/www.africa-press.net\/south-africa\/all-news\/hidden-force-boosting-the-rand\",\"name\":\"Hidden force boosting the rand - 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