By the close of trade on Thursday, the South African rand weakened against the US dollar.
- There’s just no stopping the surging U.S. dollar. That means more pain for emerging markets until the global spread of the COVID-19 pandemic and the accompany market volatility begins to subside, despite the Federal Reserve’s efforts to respond to a seemingly insatiable global demand for dollars.
- The coronavirus crisis has almost certainly ended the longest U.S. expansion on record and pushed the economy into the start of a short slump and analysts believe an 80% chance of a recession.
- The SARB slashed the repo rate by 100 basis points to 5.25%, amid concerns about the effect of coronavirus on economic growth.
- The Bank also lowered its GDP forecast from 1.2% in 2020 to 1.0% and sees inflation averaging 3.8% in 2020, way below the midpoint of its 3.0% to 6.0% target range.
- In the US, the number of people filing for initial unemployment benefits surged to a 2-1/2-year high for the week ended 13 March, as companies in the services sector laid off workers because of the coronavirus pandemic that has fractured economic activity.
- The Philadelphia Fed manufacturing index plunged to its lowest level since June 2012.
- The yield on benchmark government bonds ended mixed yesterday. The yield on 2021 bond declined to 5.43% while that for the longer-dated 2030 issue rose to 11.82%.
In early trade on Friday, the US dollar is trading 0.6% lower against the South African rand at R17.3675, while the euro is trading 0.1% lower at R18.6447. The British pound has gained 0.7% against the South African rand to trade at R20.1933.
By the close of trade on Thursday, the euro declined against most of the major currencies.
- The European Central Bank (ECB) latest stimulus provided only brief solace to investors, at a time when the world grapples to contain the coronavirus pandemic.
- The central bank in an emergency meeting, announced that it was launching a new program that would allow it to buy EUR750.00bn in government and private sector bonds as well as commercial paper.
- On the data front, German business morale plummeted in March to its lowest level since August 2009, suggesting that Europe’s largest economy is falling into recession due to the impact of the coronavirus.
- Meanwhile in the UK, the BoE cut the key interest rate to an all-time low of 0.1% and ramped up its bond-buying programme in a bid to rescue the economy from the coronavirus crisis.
In early trade on Friday, the euro has advanced 0.4% against the US dollar to trade at $1.0737, while it has weakened 0.8% against the British pound to trade at GBP0.9237.
NOVEL CORONAVIRUS STATS
244,757 confirmed cases [26,900 new cases]
10,020 reported deaths [1084 new deaths]
67,003 recovered* [0 change]
SA 150 confirmed
Last updated 7:34am Mar 20, 2020