By the close of trade on Tuesday, the South African rand weakened against the US dollar.
- South Africa slid into a deeper recession than investor expectations in 4Q19, hit by power cuts.
- At the same time, consumer and business confidence levels have languished, weighing on household spending and private sector investment.
- In the US, Fed slashed its key interest rate by 50 basis points in an emergency move to shield the world’s largest economy from the impact of the coronavirus. The Fed Chairman, Jerome Powell, stated that the US economy remained strong, but said the spread of the virus had caused a material change in the US central bank’s outlook for growth.
- Satellite data show economic activity in China could be picking up following a steep drop off caused by the coronavirus. Nitrogen dioxide levels rose across China’s industrial heartland, according to the most recent Copernicus Atmosphere Monitoring Service data compiled by Windy.Com.
- The yield on benchmark government bonds fell yesterday. The yield on 2021 bond declined to 6.06% while that for the longer-dated 2030 issue fell to 8.91%.
In early trade on Wednesday, the US dollar is trading 0.3% lower against the South African rand at R15.3611, while the euro is trading 0.4% lower at R17.1453. The British pound has declined 0.4% against the South African rand to trade at R19.6778.
By the close of trade on Tuesday, the euro advanced against most of the major currencies.
- The G7 Finance Ministers and Central Bank Governors, are closely monitoring the spread of the coronavirus disease 2019 (COVID-19) and its impact on markets and economic conditions. Given the potential impacts of COVID-19 on global growth. In a statement by the G7 “we reaffirm our commitment to use all appropriate policy tools to achieve strong, sustainable growth and safeguard against downside risks. Alongside strengthening efforts to expand health services, G7 finance ministers are ready to take actions, including fiscal measures where appropriate, to aid in the response to the virus and support the economy during this phase”.
- Eurozone consumer price index (CPI) rose in line with market expectations on an annual basis in February.
In early trade on Wednesday, the euro has slipped 0.1% against the US dollar to trade at $1.1162, while it has weakened 0.1% against the British pound to trade at GBP0.8713.