US plans to banish South Africa, and end of an era for the rand
The rand remained stable on Wednesday following the release of a purchasing managers’ index (PMI) that gauges business conditions.
Global investors are closely monitoring key US economic data ahead of the Federal Reserve’s interest rate decision next week.
The rand traded at 17.075 against the dollar, marking a roughly 0.2% increase from Tuesday’s close.
According to an S&P Global survey released on Wednesday, South Africa’s private sector activity contracted for the second consecutive month in November due to ongoing declines in output and new business volumes.
The PMI increased slightly to 49.0 from 48.8 in October, but it still remains below the 50.0 mark, which indicates the difference between growth and contraction.
At the same time, price pressures have intensified, as firms experienced a sharp rise in input costs over the year, prompting them to increase output charges at the fastest rate since February.
This week, South Africa has reported mostly disappointing economic data.
This includes slower economic growth in the third quarter, a lacklustre manufacturing survey, weaker-than-expected vehicle sales figures for November, and an increase in fuel prices for December.
On the Johannesburg Stock Exchange, the Top-40 index rose by 0.1%.
On Thursday, 4 December, the rand was trading at R17.06 to the dollar, R22.75 to the pound and R19.89 to the euro. Oil was trading slightly lower at $62.94 a barrel.
5 important things happening in South Africa today
US plans to banish South Africa: US Secretary of State Marco Rubio announced that the US plans to “banish” South Africa from the G20 and, instead, include Poland during its presidency in 2026. He shared this update on the State Department’s Substack account. [News24]
End of an era for the rand: A gauge of expected volatility for the rand versus the dollar is at its lowest level since the turn of the century, suggesting traders expect little upheaval for the South African currency as the year draws to a close. One-month implied volatility fell to 7.9%, the lowest since February 2000. [Daily Investor]
South Africa to get 46 trains from New Zealand: Traxtion, Africa’s largest private rail operator, announced a R3.4 billion investment in a fleet of 46 locomotives from KiwiRail in New Zealand to boost rail in South Africa. [Business Day]
Storm brewing over new solar rules: The Organisation Undoing Tax Abuse (Outa) says it is considering legal action against municipalities that require sign-off by Engineering Council of South Africa (Ecsa) members for home solar power systems. [MyBroadband]
ANC fails to pay salaries: The African National Congress (ANC) has failed to pay salaries for those working at its head office, Luthuli House, for the third time this year. This is not the first time that it has failed to pay its staff on time. In October, the party was unable to pay salaries following a court-ordered attachment of its bank accounts due to a debt exceeding R85 million. [Newsday]
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