Rand slips as investors wait to hear ANC’s stimulus plan
The rand entered its fifth consecutive session of losses on Tuesday morning, leading emerging-market currencies lower while investors wait to hear the ANC’s plans to boost the economy.
The ANC is expected to announce plans to address economic stimulation, on Wednesday. This follows the conclusion of the ruling party’s national executive committee (NEC) meeting at the weekend, at which the Treasury’s economic reform paper was discussed.
“This will be interesting to see given the challenges facing the domestic economy at the moment, particularly fiscal constraints, begging the question, how does the party plan to fund the stimulus without putting SA into further financial trouble?” RMB economist Siobhan Redford said.
The economic reform plan, which was announced by finance minister Tito Mboweni in August, may face some resistance by trade union federation Cosatu and the SACP.
“Note, however, that some NEC members have indicated that they need more time to form an opinion on the paper, which could lead to further delays in decision-making. The upcoming alliance political summit has been tabled as another forum for debate on the matter,” Mercato Financial Services analyst Nico Du Plessis said.
Fitch Ratings lowered its outlook on Eskom’s stand-alone credit rating to negative on Monday, citing weak revenue growth, the expectation of higher primary energy costs and lower tariff increases.
“Does [the ANC’s plan] include a plan (which we have been waiting increasingly impatiently for) for Eskom, as if the supply of power cannot be sustained, any economic stimulus will face insurmountable headwinds,” Redford said.
At 10.13am, the rand had weakened 0.5% to R15.2223/$ — its lowest level in almost a month — during intraday trade. The currency also dropped 0.4% to R16.5742/€ and 0.42% to R18.7045/£. The euro had weakened 0.11% to $1.0888.
Gold lost 0.86% to $1,459.57/oz and platinum 0.55% to $877.47. Brent crude added 0.57% to $59.72 a barrel.
Source: businesslive.co.za
