CURRENCY PATROL   

LOCKDOWN LEVEL 1 Ver3 [ DAY 21]  

TOTAL DAYS 390 – 7 HOURS 35 MINUTES

Vaccine rollout day 77 / J & J VACCINE DAY 65 [SUSPENDED DAY 7]

By the close of trade on Monday 19th April 2021, the South African rand strengthened against the US dollar.

  • South Africa recorded large current account and trade surpluses in the last two quarters of FY20 on higher demand for commodities as global trade conditions eased with the falling COVID-19 infections and a subsequent loosening of restrictions on economic activity.
  • The selling pressure on the greenback, evident last week, despite a series of stronger than expected economic reports, carries over into the new week’s activity. The euro punched through the $1.20 cap that had blocked it last week, and the dollar is testing the JPY108 level, which it has not traded below since early March. Most emerging market currencies are also firmer, and the JP Morgan Emerging Market Currency Index is moving higher for its fifth consecutive session after last week’s 1% gain. The US 10-year benchmark yield is a couple basis points lower at 1.55%.
  • Philippine President Rodrigo Duterte said challenging China in the South China Sea will only lead to violence, and that he will only do so if Beijing drills for oil in the disputed waters. “If we go there to assert our jurisdiction, it will be bloody,” Duterte said at a televised briefing late Monday, his first remarks after hundreds of Chinese vessels were spotted at a disputed reef in March. Duterte said it’s not the time to confront China and that he’s “not so much interested” in the marine resources in the disputed sea. “I will give them five Coast Guard ships, and they can chase it.  They can play with each other, and see who’s faster,” Duterte said. The Philippine leader however said he will send Navy ships in the contested waters if China begins to drill for oil. “If they get the oil, that would be time that we should act on it,” he said.
  • Chinese President Xi Jinping called for greater global economic integration and warned against a new “Cold War” and ideological confrontation in “whatever forms” at the opening ceremony of the 2021 Boao Forum for Asia (BFA) on Tuesday.
  • A new understanding is emerging at talks aimed at salvaging Iran’s nuclear deal with global powers, Tehran’s chief negotiator said on Saturday according to Iranian state media, as China’s delegate also reported progress. Abbas Araqchi said after a meeting of remaining parties to the 2015 deal that the Iranian delegation had submitted proposed texts on nuclear issues and the lifting of sanctions, and that work on a common text, “at least in areas where there are common views”, could begin.
  • The yield on benchmark government bonds rose yesterday. The yield on 2026 bond rose to 7.18%. Further, the yield on 2023 bond advanced to 4.91% while that for the longer-dated 2030 issue rose to 9.06%.

In early trade on Tuesday, the US dollar is trading lower against the South African rand at R14.2130, while the euro is trading higher at R17.1322. The British pound has marginally gained against the South African rand to trade at R19.9012.

By the close of trade on Monday, the euro declined against most of the major currencies.

  • The German Bundesbank monthly report showed that economic output decreased in 1Q21, as stricter and longer-lasting restrictions increased the losses in many service sectors.
  • When asked where UK unemployment will be at the end of this year, most economists would, probably say ‘higher than it is now’. But predicting how high remains a tricky question to answer and highlights how several aspects of the crisis in the jobs market differ from previous recessions. Let’s start with the noticeable difference – the furlough scheme. The extension of wage support through the winter lockdown and now until the end of September has helped the jobs market turn a tentative corner over recent months. While payroll-based employment is still down some 2.4% on pre-pandemic levels,  there has been a gradual recovery outside of the consumer services arena no doubt as firms have become more adept at operating through lockdowns. The admin/support sector, for instance, has now all-but-erased the 6.3% fall in employment seen amid the pandemic.
  • Russian jets have struck a terrorist training camp northeast of Palmyra, destroying 24 vehicles and half a ton of explosive materials while killing up to 200 militants, the Russian military has announced. After confirming intelligence about a camouflaged terrorist camp in the Syrian desert, the Russian Aerospace Forces carried out the airstrike, and destroyed two terrorist structures, “up to 200 militants, 24 pickups with heavy machine guns, as well as about 500 kg of ammunition and components for creating improvised explosive devices were destroyed according to Rear Admiral Aleksandr Karpov.

In early trade on Tuesday, the euro has advanced against the US dollar to trade at $1.2066, while it has gained against the British pound to trade at GBP0.8632.