Not a good sign for the GNU, and Mercedes future in South Africa questioned
The rand weakened on Thursday against a stronger dollar, following a weaker-than-expected private payrolls report that increased speculation about a potential interest rate cut by the Federal Reserve at its next meeting.
In August, US private payrolls rose by only 54,000 jobs, falling short of the 65,000 increase that economists surveyed by Reuters had predicted.
As a result, the rand traded at 17.77 against the dollar, approximately 0.5% lower than Wednesday’s close.
Like many risk-sensitive currencies, the rand often responds to global factors such as US economic policy and data, especially when there are no significant domestic economic reports.
Analysts noted that the commodity-backed currency has struggled recently, remaining range-bound despite gold prices reaching an all-time high.
On Friday, 5 September, the rand was trading at R17.74 to the dollar, R23.86 to the pound and R20.63 to the euro. Oil was trading slightly lower at $67.15 a barrel.
Here are five other important things happening in and affecting South Africa today:
Not a good sign for the GNU: The What Worries the World study indicated a decline in positive sentiment in South Africa following last year’s post-election boost after the formation of the Government of National Unity (GNU). The uneasy coalition between the ANC and DA, along with smaller parties, has been crisis-prone, lowering public sentiment. Ahead of next year’s local elections, eight in 10 South Africans in a global Ipsos poll believe the country is heading in the wrong direction. [Daily Maverick]
Mercedes-Benz’s future in question: Mercedes-Benz Group AG is contemplating sharing its South African plant with a rival following the end of a key US trade pact, raising concerns about the plant’s viability. A company spokesman stated that evaluations are ongoing as part of regular strategic discussions, but no decision has been made regarding the future of the East London facility. [BusinessTech]
Another billion rand industry at risk: South Africa’s sugar industry is valued at R25-billion, supports over 300,000 jobs. However, farmers face challenges from cheap imports, especially from Eswatini, and falling global prices due to large harvests in countries like India and Brazil. Additionally, Trump’s 30% tariff on South African imports threatens exports. [Engineering News]
19 court challenges against one law: The Western Cape Government will challenge the National Health Insurance Act (NHI) in the Constitutional Court, bringing the total number of cases against the NHI to 19. [Newsday]
Bad news for households that want to switch to prepaid: The City of Johannesburg’s power utlity, City Power, has stopped rolling out postpaid to prepaid electricity meter conversions as it investigates why some customers have stopped buying electricity. [BusinessTech]
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