Good morning,

On the wires…

·       SA’s new opt-out register: How to block spam calls

·       RAF board says it’s not in favour of a higher fuel levy

·       World Bank appoints David Vaillant as managing director, CFO

·       US, Russia explore gas sale to Europe amid Ukraine war, say sources

·       Ronaldo hails Messi after Argentina great says he already misses national team

·       NZ Rugby goes to high court to protect ‘Chiefs’ name from PNG league franchise

Quote of the day

“If your peace depends on everything going right, it’s not peace, it’s control. Learn to be steady in uncertainty. That’s real growth.” — Arben Kanani

The indicators

Currency crackdown…

The rand had a tough day on Wednesday, coming under renewed pressure as a stronger US dollar and rising oil prices combined to create an unfavourable backdrop for the rand. The rand opened at R16.58/USD and weakened during the session, with USD/ZAR reaching an intraday high of about R16.74/USD. It closed around R16.64/USD, representing a decline of roughly 0.62% on the day. 

The move was driven largely by global factors rather than domestic developments. The US dollar strengthened as markets positioned ahead of the release of the Federal Reserve’s September meeting minutes. Investors were looking for clues about the Fed’s future interest-rate path, and the firmer dollar put pressure on emerging-market currencies such as the rand.

At the same time, oil prices pushed above $100 a barrel, driven by concerns about supply disruptions. That is particularly uncomfortable for South Africa because the country is heavily reliant on imported fuel. Higher oil prices therefore mean greater demand for dollars to pay for energy imports, putting additional pressure on the rand. SA’s oil import bill surges to highest level since 1994.

The pressure was visible in other South African markets too. The Top-40 index was down around 2%, while the yield on the benchmark 2035 government bond rose by about 4.5 bps to 8.85%.

Gold also had a difficult session, with the precious metal coming under pressure from the same global forces that were weighing on the rand. Gold touched its lowest level since 5^th August, as a stronger US dollar and higher US Treasury yields reduced demand for the metal. The combination of a firmer dollar and rising bond yields is particularly negative for gold because the metal does not generate interest income.

SA’s manufacturing output will be published at 11:00 this morning. Many economists believe we will see a contraction of manufacturing output for August, due to sustained pressure from high input and power costs, US tariffs, fuel price hikes, and supply shortages. If the figures are in line with expectations of contraction, it is another example of how the war in the ME and price of oil have real life effects for our import reliant economy. 

On the radar…

·       ZAR – ALL – Iran/ US peace attempts

·       USD – Fed Waller speaks

·       USD – Initial Jobless Claims

·       EUR – ECB Publishes Account of Monetary Policy Meeting

·       ZAR – Manufacturing Production

Did you know?

The brindle bass also known as the giant grouper, is the largest member of the rockcod family and the biggest Indo-Pacific bony reef fish.