Make or break for VW in South Africa, and US slams another South African decision
The rand fell back above 16 to the dollar on Thursday as a more cautious global sentiment overnight sparked a sell-off in emerging-market assets. Analysts noted that a new wave of risk aversion drove this shift.
The rand was trading at 16.1625 against the dollar, marking a 0.5% decline from Wednesday’s close.
“When global investors become risk-averse, they often sell off emerging-market assets first. That’s exactly what happened overnight,” analysts explained.
As a result, the rand weakened against other currencies and became one of the poorer-performing emerging-market currencies.
The local currency lost value primarily due to a stronger US dollar as investors sought safety.
Additionally, declines in gold and platinum prices affected the rand, given South Africa’s status as a major exporter of both metals.
Gold prices dropped significantly, influenced by signs of easing tensions in US-China trade relations, which added downward pressure on these precious metals.
“Equity market turbulence and a retreat in commodity prices added to the USD’s appeal, while reduced expectations of Fed rate cuts ensured that the USD recovered further,” said analysts.
On the Johannesburg Stock Exchange, the Top-40 index was down 2.4%, as falling prices of precious metals hurt miners in the resource-driven economy.
As of Friday, 6 February, the rand is trading at R16.25 to the dollar, R22.04 to the pound, and R19.18 to the euro. Gold is currently valued at $4,824.67 per ounce, while oil prices have risen to $67.90 per barrel.
5 important things happening in South Africa today
Make-or-break for VW in South Africa: Volkswagen South Africa (VWSA) faces an uncertain future, with 2026 seen as a critical year for the company. VWSA employs about 4,000 people. Martina Biene, chair and MD of Volkswagen Group Africa, informed President Cyril Ramaphosa in a letter before Christmas about the urgent need for an investment decision from the parent company for its next project this year. [Moneyweb]
US slams South Africa: The United States has reacted to the South African Department of International Relations and Cooperation’s (DIRCO) decision to expel the Charge d’Affaires from the Israeli embassy, calling it yet another example of misguided foreign policy choices. [Newsday]
Big news for South Africa’s largest service provider: MTN, the largest mobile service provider in Africa, is potentially set to purchase IHS Towers, the continent’s biggest cellphone tower operator, in a deal exceeding R33 billion. This acquisition would mark a new chapter in the long-standing partnership between the two African companies, characterised by a blend of shared business goals and occasional boardroom competition. [BusinessDay]
Smart trolleys for major retailer: Shoprite has reported that customer feedback on the smart trolleys being tested at two stores in Cape Town has been encouraging, suggesting a possible expansion in the future. These smart trolleys are part of a range of innovative self-checkout solutions introduced in recent years that allow shoppers to bypass traditional checkout lines. [MyBroadband]
Rhino horn trade heads to court: The Supreme Court of Appeal has been requested to clarify a complex set of legal issues arising from a contentious court case involving rhino horn trading. This ruling potentially paves the way for South African rhino breeders to engage in international sales of their horns, despite a longstanding 50-year prohibition on such transactions. [DailyMaverick]
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