Rand strengthens on surprisingly solid second-quarter GDP
The rand was firmer on Tuesday afternoon as investors reacted to better-than-expected GDP growth in the second quarter.
The local economy expanded 3.1% in the second quarter of 2019 from a revised contraction of 3.1% in the previous quarter, surpassing economists’ expectations of an expansion of 2.5%, according to a Bloomberg consensus.
“While this report is encouraging and does offer some light at the end of the tunnel for the nation, it does not change the fact that overall sentiment and economic conditions remain fragile,” FXTM senior research analyst Lukman Otunuga said.
The mining sector led the second-quarter rebound after climbing 14.4% while manufacturing rose 2.1%.
At 1pm, the rand had firmed 0.68% to R15.1478/$, 0.95% to R16.5694/€ and 0.95% to R18.2279/£. The euro had weakened 0.28% to $1.0939.
Gold was flat at $1,530.35/oz while platinum added 0.82% to $938.67. Brent crude lost 1.4% to $57.78 a barrel.
The latest GDP figures come just over two weeks before the SA Reserve Bank’s monetary policy meeting as markets have started to price in another interest rate cut this year.
“Weak economic growth supports our view that inflationary pressures will remain subdued over the coming months,” senior emerging-markets economist at Capital Economics John Ashbourne said.
“We think that this has opened a small window for another interest-rate cut on September 19,” Ashbourne said.
Source: businesslive.co.za
