LOCKDOWN LEVEL 3 Ver 2 [ DAY 2]  

TOTAL DAYS 453 – 7 HOURS 30 MINUTES

Vaccine rollout day 139 / J & J VACCINE DAY 127 [Phase 2]

By the close of trade on Monday 21st June 2021, the South African rand strengthened against the US dollar.

  • The greenback’s losses were limited after the US Fed’s surprise hawkish monetary policy tilt last week.  From an almost three-year high of R13.43 to the US dollar in the first week of June, the rand closed at around R14.40 to the greenback on Friday. It seems that rand volatility has returned, with the currency over 7% down since June 4.  However, the rand was already coming under pressure even before the Fed’s announcement, having weakened to around R14 to the US dollar following Eskom’s worst round of load shedding this year in the second week of June.  The third wave of Covid-19 infections hitting South Africa, which forced government to increase pandemic-linked restrictions to alert Level 3 last week, is likely to have also weighed on the rand.
  • Current restrictions include a 10pm to 4am curfew, which means that restaurants and other businesses such as airlines need to stop operations by 9pm daily. Retail liquor trading (for offsite consumption) is also banned from Friday to Sunday under current Level 3 restrictions.
  • The South African Reserve Bank (Sarb) had already signalled at its Monetary Policy Committee meetings in March and May that it could raise the repo rate in the second half of this year.  An increase in consumer inflation, the waning rand and higher Brent oil prices are likely to fuel the SARB into taking a more hawkish approach.
  • The 2021 institutional U.S. loan default rate forecast has been lowered to 1.5% from 2.5%, reflecting continued capital market confidence as constricted sectors re-open, according to a new Fitch Ratings report. “The anticipated 1.5% default rate would be the lowest rate since 2011 when it dropped to 0.6%. The year-end default rate could finish even lower than the projection if the current, strong environment continues,” said Eric Rosenthal Senior Director Leveraged Finance.
  • Multiple reports indicate Iran’s only nuclear power plant has “undergone a temporary emergency shutdown,” as per local reports via state television.  “an official from the state electric energy company said on a talk show that the Bushehr plant shutdown began on Saturday and would last for three to four days.” There was no immediate word on why the Bushehr Nuclear Power Plant, located 10.5 miles southeast of the city of Bushehr, was shut down. This is Iran’s only nuclear power plant.
  • The yield on benchmark government bonds rose yesterday. The yield on 2026 bond rose to 7.45%. Further, the yield on 2023 bond advanced to 5.25% while that for the longer-dated 2030 issue rose to 9.06%.

In early trade on Tuesday 22nd June 2021, the US dollar is trading marginally higher against the South African rand at R14.2396, while the euro is trading marginally lower at R16.9626.  The British pound has declined against the South African rand to trade at R19.8172.

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

  • The European Central Bank (ECB) President, Christine Lagarde stated that the central bank policymakers have made progress in reshaping the ECB’s strategic goals, including the role it plays in fighting climate change and a revised approach to inflation.
  • Today’s date, 21 June carries with it a significance in the Northern Hemisphere: the summer solstice and the ‘longest day’. Closely aligned to the summer solstice is Stonehenge. On this day the sun rises behind the Heel Stone, the ancient entrance to the Stone Circle – rays of sunlight are channelled into the centre of the monument. The importance of Stonehenge to the summer solstice dates back to its formation in c.3,000 BC.

In early trade on Tuesday 22nd June 2021, the euro slipped against the US dollar to trade at $1.1922, while it has gained against the British pound to trade at GBP0.8572.