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02 Apr 2018

Week Ahead: Higher petrol and diesel prices for April, while March vehicle sales lift on buying ahead of tax increases

Annabel Bishop

Chief Economist

Figure 1: SA Monetary Policy Committee (MPC) meeting dates for 2018

Currency outlook for the week ahead and foreign portfolio flows:

Figure 2: Purchasing price parity value of the rand

After gaining some ground towards the beginning of last week, the rand depreciated slightly after the MPC rate cut announcement on Wednesday 28th, as lower domestic interest rates tend to reduce the lure of South African assets for carry trade activity. The domestic currency has traded relatively flat as trade has been thin over the last few days with many markets closed as a result of the religious holidays. At the time of writing the domestic currency was trading at 11. 85/USD. This slightly elevated level can partly be attributed to a weakening greenback on continuing anxieties around the threat of a global trade war, following China’s imposed tariffs on a range of U.S. agricultural goods recently.

In the week ahead, the rand is expected to trade in a range of R11.35/USD – R12.35/USD, R14.07/EUR - R15.07/EUR and R16.14/GBP - R17.14/GBP.

Figure 3: Purchasing price parity value of the rand

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