Rand recovers a bit on uncertain dollar and as markets look past Trump’s twitter comment

The rand was a lot stronger on Friday morning, courtesy of a shaky dollar, but its strength comes off a low base and is unlikely to be enough to stave off another increase in fuel prices in September.

Initial estimates suggest that the retail price of petrol will increase by 16c a litre, pushing it to record highs of R16.19/l. The price of diesel is set to set rise by 15c/l.

The projected increases in fuel prices are a direct consequence of a weaker rand throughout August, which more than offset the net positive effect of steady international oil prices.

Agbiz agricultural economist Wandile Sihlobo said the agribusinesses that operated in the transport industry would feel the pressure on input costs due to their exposure to road transport.

“Roughly 81% of maize, 76% of wheat and 69% of soybeans in SA are transported by road. On average, 75% of national grain and oilseed are transported by road,” he said in an e-mailed note to clients.

The rand has been caught in a web of negative global and local forces, which pushed it to well over R15 to the dollar at one stage during August, before bouncing back.

US President Donald Trump elevated the heated land reform debate to the global stage early on Thursday through his controversial tweet, contributing to the wobble in the value of the rand before it subsequently recovered.

Source: businesslive.co.za