Surprise rand rally cut short by expected retail slump
The South African rand’s recent rally which sent it to fresh highs has been cut short by an anticipated contraction in the country’s retail data, which will be released on Wednesday.
The rand staged an unexpected recovery this week, closing on Tuesday at R13.05 to the US dollar, following the release of positive mining data, which surprised many economists.
Last week’s data showed surprise improvements in mining and manufacturing output in March, putting the country on track to avoid slipping into a technical recession this year.
This, combined with negative sentiment around US president Donald Trump and worries over his ties to Russia, sent the rand climbing against the dollar, pushing the currency to some of its highest levels since the firing of finance minister Pravin Gordhan.
However, retail data expected to be released by Stats SA today is putting a damper on things, reversing the rally.
Analysts forecast a year-on-year contraction of 0.7% in the sector, after sales fell 1.7% in February, according to Reuters.
By 9h30, the rand had already dropped 0.8% against the dollar to R13.15.
Read: American bank wants SA’s “vague and embarrassing” rand-rigging probe dropped: report
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