Sunday, June 16, 2024

Pula softens against rand

The Pula gained traction against most of its major trading peers but softened relative to the rand. The local crawling unit shed half a percent to the rand but gained 1.1% and 0.6% to the euro and pound respectively, during the week.

The Pula has lost 8% to the greenback though it has firmed by 1.8% to the rand and 3.3% to the euro for the year thus far.

The rand was heading south this week, tracking the ruble which tumbled this week on concerns of the Russian economy due to sanctions imposed by thewestern powers. The rand started the week on a high note as investors were relieved by Standard &Poor and Fitch’s rating of SA. The 2 major credit rating agencies maintained their rating on SA at BBB- and BBB respectively, though Fitch warned against increased current account and budget deficits which could pose a threat to economic growth going forward.

Meanwhile, the ruble plunged to record lows during the week, posing a selling pressure on emerging markets currencies including the rand as it tumbled to levels of R11.74/$. The Russian central bank during the week hiked interest rates from 10.5% to 17% in order to try to curb a crash of the ruble.

However the rand slightly recouped some of its losses trading around R11.56/$, following data from Statistics SA which showed that SA producer price inflation reduced to 6.5% in November. The Fed’s decision not to quicken to hike rates also buoyed the rand as it ended the week trading around R11.64/$.


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