Starlink ‘threat’ to South Africa questioned, and land expropriation not going anywhere
South Africa’s rand fell on Tuesday as a stronger dollar and retreating commodity prices weighed on risk assets.
The rand traded as weak as 17.45 against the dollar, down 1.3% on Monday’s close, but managed to recover on Wednesday morning to around 17.34.
“Our stock exchange on resources is also not doing well. It’s more of a correction than anything else,” said Andre Cilliers, currency strategist at TreasuryONE.
Gold prices fell over 4% on Tuesday, as the dollar firmed and investors booked profits after expectations of US interest rate cuts and sustained safe-haven demand drove the yellow metal to a fresh record high in the previous session.
“We don’t see this (falling rand) going on too long. It will then be in reverse again,” Cilliers said.
After weakening last week, the risk‑sensitive rand had rallied on Monday on hopes of South Africa’s removal from the FATF “grey list”, only to reverse on Tuesday.
South Africa was added to the FATF list in February 2023 after criticism of its systems to stop money laundering and terrorist financing. The watchdog’s plenary meeting takes place from October 22-24.
Domestically focused investors parsed South Africa’s composite leading business cycle indicator – which aggregates vehicle sales, business confidence, money supply and other inputs— which rose 1.6% m/m in August, central bank data showed.
“For the first two months of Q3.25 versus the first two months of Q2.25 the leading indicator rose 1.7%, signalling a potential strong lift in economic activity quarter on quarter in Q2.26, given the six-month lead,” said Annabel Bishop, chief economist at Investec in a research note.
The dollar was up 0.4% against a basket of currencies as investors awaited US inflation data on Friday.
On the Johannesburg Stock Exchange, the Top-40 index was last down 2.5%. Meanwhile, South Africa’s benchmark 2035 government bond was firmer. Its yield fell 1.5 basis points to 8.91%.
On Wednesday, the rand was trading at R17.34 to the dollar, R23.24 to the pound and R20.17 to the euro. Gold is trading at $4,137 an ounce, while oil has climbed to $62.40 a barrel.
5 important things happening in South Africa today
Questions over Starlink: Parliamentarians want answers on the legal standing of communication minister Solly Malatsi’s proposal to introduce Equity Equivalent Investment Programmes (EEIPs) in the ICT sector. They raised concerns about the draft policy’s legal standing and whether Starlink—which would be able to enter the country through the policy—was a national security risk. Starlink’s rollout may still be years away, as it will take time to incorporate the policy into regulations and address potential legal challenges. [MyBroadband]
Land expropriation and BEE here to stay: Minister of International Relations Ronald Lamola says that South Africa will not compromise on its policies and bow to pressure from the United States to ease trade relations. The US and the Trump administration have put pressure on South Africa in negotiations to review transformation laws and controversial legislation like land expropriation. Lamola said that negotiations were ongoing, but the US was stepping outside economic and trade issues. [EWN]
Inflation target warning: Reserve Bank governor Lesetja Kganyago has warned that the central bank is ‘deadly serious’ about lowering South Africa’s inflation target and will do what is necessary to ensure that it gets there. He said it could take as long as two years to reach the still unofficial 3% target, during which time the SARB’s policies will reflect this move. Economists and analysts expect the National Treasury to announce the official change soon, likely at the Medium-Term Budget Policy Statement (MTBPS) next month. [News24]
Crackdown on gambling ads: The National Gambling Board (NBG) plans to crack down on gambling advertising in South Africa, which has boomed in recent years in the absence of sufficient guidelines. Among other interventions, the NGB plans to tighten regulations and implement significant fines and temporary advertising rights suspensions for non-compliance. The board said there has been a proliferation of gambling advertising in South Africa without sufficient guidelines. [Daily Investor]
School toilets in the pits: Only 8,820 of South Africa’s 22,381 public schools have municipal flush toilets, which are safe, modern sanitation systems connected to municipal infrastructure. While some provinces have more than 90% of schools with these facilities, others, such as Limpopo, have coverage as low as 15.7%. This was revealed by Basic Education Minister Siviwe Gwarube in a Parliamentary response to questions posed to her by Democratic Alliance (DA) MP Sibongiseni Ngcobo. [Newsday]
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