More bad news for people with DStv, and government coming after electric vehicle owners
The rand strengthened in early trading on Monday, buoyed by falling oil prices as investors considered the possibility of progress in US-Iran peace negotiations ahead of a local interest rate decision later this week.
The rand was trading at 16.3375 against the dollar, approximately 0.8% higher than its previous close.
Oil prices reached two-week lows on Monday due to optimism that the US and Iran were moving closer to a peace agreement, despite ongoing disagreements over key issues.
On Saturday, US President Donald Trump announced that Washington and Tehran had “largely negotiated” an understanding on a peace deal that would reopen the Strait of Hormuz, a crucial route for about a fifth of global oil and liquefied natural gas shipments before the conflict.
Investors are particularly focused on the central bank’s rate decision scheduled for Thursday.
Economists at Nedbank anticipate that the monetary policy committee will raise the repo rate by 25 basis points, bringing it to 7% and the prime rate to 10.50%.
The bank’s economists noted in a research report that inflation expectations are particularly sensitive to increases in petrol prices.
Therefore, there is a relatively high risk of second-round effects. Tightening monetary policy now would help ensure that the inflationary impact of this supply-side shock is temporary.
Economic indicators to be released this week include the composite leading business cycle indicator on Tuesday and producer inflation data on Thursday.
Additionally, South Africa’s benchmark 2035 government bond strengthened in early trading, with yields falling by 4.5 basis points to 8.635%.
On Tuesday, 26 May, the rand was trading at R16.33 to the dollar, R22.02 to the pound, and R19.00 to the euro. Gold is trading lower at $4,528.76 an ounce, while oil prices were at $98.21 a barrel.
5 important things happening in South Africa today
Bad news for people with DStv: Experts believe Canal+ found MultiChoice in a worse financial position than it thought, and the company is conducting “open-heart surgery” to turn it around. Unfortunately for DStv subscribers, this would likely result in the company drastically slimming down the product offering and culling underperforming content, meaning fewer channels to choose from. [MyBroadband]
Government coming after EV owners: Motorists might soon pay a separate fee for the Road Accident Fund when they buy or renew their vehicle licence, as the rise of electric vehicles challenges the current petrol levy funding model. [Moneyweb]
R10 billion upgrade for one of South Africa’s international airports: The Cape Town International Airport (CTIA) is currently undergoing a massive R10-billion overhaul. The improvements are part of a broader R21.7-billion national infrastructure investment programme led by Airports Company South Africa (ACSA). It includes a R6.4-billion project to realign the airport’s main runway to improve operational resilience by optimising aircraft movement patterns. [TopAuto]
Vehicle trade deficit with Asia reaches R90 billion: South Africa’s vehicle trade deficit with key partners China and India hit R90 billion last year, highlighting the imbalanced trade with these manufacturing-intensive nations. The deficit with China was particularly significant, reaching R57.7 billion, prompting the government to seek better trade terms with Beijing. [Business Day]
Government miserably fails its own targets: South Africa’s National Development Plan 2030 aimed for 5.4% annual GDP growth and to reduce unemployment from 24.9% in 2012 to 6% by 2030. However, GDP growth declined from 2.4% in 2012 to about 1%, and the unemployment rate rose to 32.7%, far exceeding the targets. [Daily Investor]
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