The moment we have dreaded has dawned and South Africa has recorded its first case of Covid-19.  In KZN as well!

By the close of trade on Thursday, the South African rand weakened against the US dollar.

  • Some of the declines in emerging market currencies have been dramatic, rivaling recent drops in the S&P 500 and other stock markets. The Brazilian real – the world’s worst-performing traded currency year-to-date – has fallen more than 13% this year, with the Chilean peso and South African rand not far behind. All three nations, like many other emerging market economies, count China as one of the top destinations for their commodity exports.
  • On the data front, business confidence marginally rose in February, as the domestic economy struggles to grow.
  • In the US, the number of people filing for unemployment benefits fell less than expected for the week ended 28 February, suggesting the labour market was on solid footing despite the coronavirus outbreak.
  • Factory orders fell more-than-expected on a monthly basis in January, as coronavirus outbreak strains supply chains and undercuts the manufacturing sector.
  • Non-farm productivity rose less than expected in 4Q19.
  • The President of the Dallas Federal Reserve (Fed) Bank, Robert Kaplan, stated that the US economy should be able to avoid a severe downturn as a result of the coronavirus.
  • The International Monetary Fund has announced $50bn (£39bn) of support for countries hit by the coronavirus. The organisation also warned that the outbreak had already pushed this year’s global economic growth below last year’s levels. The emergency measure came after the virus has spread rapidly outside China to more than 70 countries. This week governments and central banks around the world have taken action to ease the impact of the virus.
  • The yield on benchmark government bonds rose yesterday. The yield on 2021 bond advanced to 6.05% while that for the longer-dated 2030 issue rose to 8.88%.

In early trade on Friday, the US dollar is trading 0.4% higher against the South African rand at R15.6917, while the euro is trading 0.4% higher at R17.6364.   The British pound has gained 0.5% against the South African rand to trade at R20.3416.

By the close of trade on Thursday, the euro advanced against most of the major currencies.

  • In the UK, Bank of England (BoE) Governor, Mark Carney, stated that the bank’s top policymakers are trying to gauge the scale of the hit to Britain’s economy from the spread of coronavirus.
  • The EU and euro face a sudden deterioration in economic conditions due to the coronavirus, which seems certain to widen the differences between Germany and the spendthrift Mediterranean members. But a more immediate problem is the increasing likelihood that the ECB will lose control over financial asset prices, particularly those of government bonds.

In early trade on Friday, the euro has marginally advanced against the US dollar to trade at $1.1239, while it has marginally weakened against the British pound to trade at GBP0.8670.