LOCKDOWN LEVEL 3  [Adjusted ver. 3] 


Vaccine rollout day 173

New cases 9718
New Deaths 287
Recovery Rate 90.8%

By the close of trade on Friday 23rd July 2021, the South African rand weakened against the US dollar.  South Africa’s two provinces hit hard by riots and looting continued their cleanup and counting the destruction and loss running into Billions of rands.  On Sunday evening President Cyril Ramaphosa took the country to adjusted level 3.  Covid or rather Delta is back in the limelight as cases surge in e.g., UK and Spain, but the most interesting thing is now to follow the hospitalization data and not the case data, as it seems as if widespread vaccinations among risk groups have decoupled the relationship between cases and hospitalizations.

  • The International Monetary Fund resident representative for South Africa, Max Alier, suggested that South Africa should aim to reprioritise its expenditure to offset the cost of relief measures for businesses and individuals affected by the civil unrest and accelerate reforms to raise inclusive economic growth, by structural reforms that attract private investment, raise economic growth and create jobs.
  • Meanwhile, in the US, business activity rose in July, amid supply bottlenecks indicating subsiding economic activity.
  • The fundamental reason for the deadlock in China-US relations is that the US treats China as an “imaginary enemy,” Chinese Vice Foreign Minister Xie Feng said during a meeting with US Deputy Secretary of State Wendy Sherman on Monday morning.  The U.S. and China barreled into their first high-level talks since March trading sanctions and rhetorical barbs, raising the stakes for the effort to stabilize strained relations between the world’s two largest economies.
  • China is beating the U.S. when it comes to innovation in online money, posing challenges to the U.S. dollar’s status as the de facto monetary reserve. Nearly 80 countries including China and the U.S. are in the process of developing a CBDC, or Central Bank Digital Currency. It’s a form of money that’s regulated but exists entirely online. China has already launched its digital yuan to more than a million Chinese citizens, while the U.S. is still largely focused on research.  The internationalization of Chinese yuan accelerated in 2020 despite the ravaging global pandemic and the US government’s containment of China’s growth. Experts predict there exists great room for the currency’s further internationalization, calling for convenient flows of the yuan and expansion of cross border investment avenues. The yuan internationalization index reached 5.02 at the end of 2020, a sharp increase of 54.2 percent from the previous year, making it No.3 among international currencies.
  • The yield on benchmark government bonds fell on Friday. The yield on 2026 bond fell to 7.33%. Further, the yield on 2023 bond declined to 4.99%, while that for the longer-dated 2030 issue fell to 8.93%.

In early trade on Monday 26th July 2021, the US dollar is trading higher against the South African rand at R14.8636, while the euro is trading marginally higher at R17.4972.  The British pound has marginally gained against the South African rand to trade at R20.4264.

By the close of trade on Friday 23rd July 2021, the euro declined against most of the major currencies.

  • Eurozone manufacturing PMI rose more than expected in July.
  • German manufacturing data rose to a three month high amid strong demand and easing of pandemic restrictions. Also, the service sector expanded in July, showing inflationary pressures.
  • Today sees the latest release of the au Jibun Bank Flash Japan Composite PMI®. Published on a monthly basis approximately one week before final PMI data are released, this makes the PMI the earliest available indicator of private sector operating conditions in Japan. The estimate is typically based on approximately 85%–90% of total PMI survey responses each month and is designed to provide an accurate indication of final PMI data.
  • Foreign exchange markets never bought into the strong view promulgated by the local bank economists over recent weeks that the RBNZ had to tighten monetary policy immediately and hike the OCR interest rate. In times gone by a sudden shift upwards in the forward pricing for New Zealand’s short-term interest rates would have sent the Kiwi dollar up one or two cents.

In early trade on Monday 26th July 2021, the euro has marginally slipped against the US dollar to trade at $1.1786, while it has gained against the British pound to trade at GBP0.8576.