LOCKDOWN LEVEL 3  [Adjusted ver. 3] 


Vaccine rollout day 192

Vaccine rollout day 192
New cases 10685
New Deaths 553
Recovery Rate 91.2%

The rand continued to get hammered yesterday as the developments in Afghanistan and the Corona Virus topped the headlines. With COVID infection numbers continuing to increase in many parts of the world, New Zealand was forced into an immediate 3-day lockdown on the detection of a solitary case. The NZ Central Bank was widely expected to be the first developed nation to hike interest rates yesterday, but they preferred to err on the side of caution and leave rates on hold.

  • The U.S. has frozen nearly $9.5 billion in assets belonging to the Afghan central bank and stopped shipments of cash to the nation as it tries to keep a Taliban-led government from accessing the money, an administration official confirmed Tuesday. The official said that any central bank assets that the Afghan government has in the U.S. will not be available to the Taliban, which remains on the Treasury Department’s sanctions designation list. Ajmal Ahmady, acting head of Da Afghan Bank, the nation’s central bank, early Monday tweeted that he learned on Friday that shipments of dollars would stop.
  • What started as a novel virus in China quickly became a sweeping disease that shut down the world and put a 1.5 year halt on the global economy. But while some countries’ economies are already back to normal, others are lagging far behind.  At the top, China and the U.S. are recovering at breakneck speed. In fact, recovering is the wrong word for China, as they reached pre-pandemic GDP per capita levels just after Q2’2020.  On the other end, some countries are looking at years—not months—when it comes to their recovery date. Saudi Arabia isn’t expected to recover until after Q1’2024, and Argentina is estimated to have an even slower recovery, occurring only after Q2’2026.
  • Fed’s Powell,  It is still unclear if the Delta variant will have a significant impact on the economy. We are not simply going to “revert” to a pre-pandemic economy stated Powell in a tweet. Powell further continued that Digital Money is becoming ore and more important.  Powell added that the challenging question was whether the FED should have a digital currency?
  • US sanctions and Chinese countermeasures related to the situation in Hong Kong threaten to ignite the tinderbox of US-China economic relations. That potential conflagration could soon endanger not only bilateral trade and finance but also cooperation to counter global warming and nuclear proliferation. Yet officials in both countries, along with business leaders, seem complacent about the risks inherent in escalating the US-China sanctions war. Neither side is likely to give in to the other’s economic pressure, but both need to temper and contain the scope of their escalatory actions.
  • July US retail sales are softer than expected, falling 1.1% month-on-month, primarily because of weaker auto sales. Excluding autos, sales were down 0.4%. Consensus was looking for growth of -0.3% and +0.2% respectively. There were some upward revisions, but it is still a modestly disappointing outcome, although not a calamity. With the economy having re-opened there are more options on which to spend money. Retail sales only makes up 40-45% of total consumer spending and they are still up 17.2% on pre-pandemic levels.
  • Japan’s exports in July jumped 37% from a year ago, the government said Wednesday, highlighting an overseas recovery from the coronavirus pandemic. Imports also grew, rising 28.5%, according to Finance Ministry data, for the second straight month of a trade surplus for the world’s third largest economy. Japan’s exports grew to the U.S., Asia and Europe; while imports increased from Brazil, Belgium and Kuwait. By category, exports grew in food, iron and steel products, and electronic parts. Imports rose in food, auto parts and oil. Japan marked a trade surplus with the U.S., but a deficit with China in July.
  • The risk-sensitive Australian Dollar fell sharply versus the US Dollar overnight. A broad sense of risk aversion throughout global markets dragged AUD/USD over 1% lower. The currency pair, which is often used to gauge risk-taking among traders on a global scale, is at its lowest point since November 2020. A disappointing US retail sales figure crossed the wires prior to the New York opening bell overnight, which fueled bearish bets. Markets were already jittery after equity markets across the Asia Pacific region traded lower on Tuesday.

In early morning trade on Wednesday 18th August 2021, the Rand is trading at USDZAR 14.85 this morning.

Highlighted pairings:

  • EURZAR 17.3962
  • GBPZAR 20.48
  • AUDZAR 10.7862