Just when you thought things couldn’t get any worse for South Africa’s rand … they probably won’t.
The currency slumped to a record low against the dollar in April, roiled by a slew of bad news: an ever-widening fiscal gap and soaring government debt; credit-rating downgrades leaving the country deep in junk territory; expulsion from a major bond index tracked by trillions of dollars of funds; and the implosion of the economy amid a strict coronavirus lockdown.
But there are signs the bad news is priced in, and the rand may be poised for a rebound as emerging markets recover from the devastation of the coronavirus pandemic.
The rand’s tentative recovery from a record low of 19.35 per dollar is encouraging options traders to prune bets on further losses. Implied volatility, which measures expected swings based on the price of options to buy and sell the rand, fell below actual volatility at the end of March, suggesting traders expected fluctuations to start moderating. That spread has continued to widen and is now the biggest in almost 11 years.
Investors in the futures market are becoming more bullish. Traders now hold a net long-rand position, meaning contracts betting on rand gains against the dollar outweigh wagers on declines, Commodity Futures Trading Commission data show. That’s a turnaround from late March and early April, when net shorts were at the highest level in more than a year.
The rand’s slump has pushed a technical indicator known as the relative strength index above the oversold level. The South African currency’s monthly RSI has moved above 70, a level that suggests to some traders that the sell-off has gone too far and the rand may be poised for a rebound. The last time the monthly RSI was above 70 was in March 2016, when it preceded a 10 per cent gain in the ensuing 12 months.
The relentless sell-off of South African government bonds – 60 billion rand ($3.2bn) of outflows this year – has started to ease. A key risk – the country’s exclusion from the FTSE World Government Bond Index – came and went at the end of April. That means investors eyeing South Africa’s relatively high yields don’t have to worry about a sudden surge in outflows. The 30-day moving average of daily outflows has dropped to 588 million rand, from as high as 2.3bn rand in April.
Meanwhile, the rand posted a second straight week of gains last week for the first time this year. And after being one of the worst emerging-market currencies in the first four months of the year, it is one of the top performers in May. With risk appetite returning as countries around the world ease lockdown restrictions and Federal Reserve policy measures weaken the dollar, and with little on the local front to spook investors, that may just be the start of a trend.
“The rand will follow the course of the world’s financial markets,” said Warrick Butler, a Johannesburg-based trader at Standard Bank Group, which sees the rand appreciating to 16.50 per dollar by year-end. “Domestic issues are no longer a major concern, unless of course we get an outlier situation.”
The South African currency gained 0.5 per cent to 18.2631 per dollar by 8:36am on Monday in Johannesburg, bringing its advance this month to 1.4 per cent.
The Bio
Hometown: Bogota, Colombia
Favourite place to relax in UAE: the desert around Al Mleiha in Sharjah or the eastern mangroves in Abu Dhabi
The one book everyone should read: 100 Years of Solitude by Gabriel Garcia Marquez. It will make your mind fly
Favourite documentary: Chasing Coral by Jeff Orlowski. It's a good reality check about one of the most valued ecosystems for humanity
The National Archives, Abu Dhabi
Founded over 50 years ago, the National Archives collects valuable historical material relating to the UAE, and is the oldest and richest archive relating to the Arabian Gulf.
Much of the material can be viewed on line at the Arabian Gulf Digital Archive - https://www.agda.ae/en
Results
6.30pm: Mazrat Al Ruwayah Group Two (PA) US$55,000 (Dirt) 1,600m; Winner: Rasi, Harry Bentley (jockey), Sulaiman Al Ghunaimi (trainer).
7.05pm: Meydan Trophy (TB) $100,000 (Turf) 1,900m; Winner: Ya Hayati, William Buick, Charlie Appleby.
7.40pm: Handicap (TB) $135,000 (D) 1,200m; Winner: Bochart, Richard Mullen, Satish Seemar.
8.15pm: Balanchine Group Two (TB) $250,000 (T) 1,800m; Winner: Magic Lily, William Buick, Charlie Appleby.
8.50pm: Handicap (TB) $135,000 (T) 1,000m; Winner: Waady, Jim Crowley, Doug Watson.
9.25pm: Firebreak Stakes Group Three (TB) $200,000 (D) 1,600m; Winner: Capezzano, Mickael Barzalona, Salem bin Ghadayer.
10pm: Handicap (TB) $175,000 (T) 2,410m; Winner: Eynhallow, Mickael Barzalona, Charlie Appleby.
Key findings of Jenkins report
- Founder of the Muslim Brotherhood, Hassan al Banna, "accepted the political utility of violence"
- Views of key Muslim Brotherhood ideologue, Sayyid Qutb, have “consistently been understood” as permitting “the use of extreme violence in the pursuit of the perfect Islamic society” and “never been institutionally disowned” by the movement.
- Muslim Brotherhood at all levels has repeatedly defended Hamas attacks against Israel, including the use of suicide bombers and the killing of civilians.
- Laying out the report in the House of Commons, David Cameron told MPs: "The main findings of the review support the conclusion that membership of, association with, or influence by the Muslim Brotherhood should be considered as a possible indicator of extremism."
More from Rashmee Roshan Lall
The Voice of Hind Rajab
Starring: Saja Kilani, Clara Khoury, Motaz Malhees
Director: Kaouther Ben Hania
Rating: 4/5
The biog
Favourite food: Tabbouleh, greek salad and sushi
Favourite TV show: That 70s Show
Favourite animal: Ferrets, they are smart, sensitive, playful and loving
Favourite holiday destination: Seychelles, my resolution for 2020 is to visit as many spiritual retreats and animal shelters across the world as I can
Name of first pet: Eddy, a Persian cat that showed up at our home
Favourite dog breed: I love them all - if I had to pick Yorkshire terrier for small dogs and St Bernard's for big
Diriyah%20project%20at%20a%20glance
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Company profile
Date started: Founded in May 2017 and operational since April 2018
Founders: co-founder and chief executive, Doaa Aref; Dr Rasha Rady, co-founder and chief operating officer.
Based: Cairo, Egypt
Sector: Health-tech
Size: 22 employees
Funding: Seed funding
Investors: Flat6labs, 500 Falcons, three angel investors
Skewed figures
In the village of Mevagissey in southwest England the housing stock has doubled in the last century while the number of residents is half the historic high. The village's Neighbourhood Development Plan states that 26% of homes are holiday retreats. Prices are high, averaging around £300,000, £50,000 more than the Cornish average of £250,000. The local average wage is £15,458.
THE SPECS
2020 Toyota Corolla Hybrid LE
Engine: 1.8 litre combined with 16-volt electric motors
Transmission: Automatic with manual shifting mode
Power: 121hp
Torque: 142Nm
Price: Dh95,900
LOVE%20AGAIN
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Bullet%20Train
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BMW M5 specs
Engine: 4.4-litre twin-turbo V-8 petrol enging with additional electric motor
Power: 727hp
Torque: 1,000Nm
Transmission: 8-speed auto
Fuel consumption: 10.6L/100km
On sale: Now
Price: From Dh650,000
MIDWAY
Produced: Lionsgate Films, Shanghai Ryui Entertainment, Street Light Entertainment
Directed: Roland Emmerich
Cast: Ed Skrein, Woody Harrelson, Dennis Quaid, Aaron Eckhart, Luke Evans, Nick Jonas, Mandy Moore, Darren Criss
Rating: 3.5/5 stars
Ticket prices
General admission Dh295 (under-three free)
Buy a four-person Family & Friends ticket and pay for only three tickets, so the fourth family member is free
Buy tickets at: wbworldabudhabi.com/en/tickets
Tips for job-seekers
- Do not submit your application through the Easy Apply button on LinkedIn. Employers receive between 600 and 800 replies for each job advert on the platform. If you are the right fit for a job, connect to a relevant person in the company on LinkedIn and send them a direct message.
- Make sure you are an exact fit for the job advertised. If you are an HR manager with five years’ experience in retail and the job requires a similar candidate with five years’ experience in consumer, you should apply. But if you have no experience in HR, do not apply for the job.
David Mackenzie, founder of recruitment agency Mackenzie Jones Middle East
How to apply for a drone permit
- Individuals must register on UAE Drone app or website using their UAE Pass
- Add all their personal details, including name, nationality, passport number, Emiratis ID, email and phone number
- Upload the training certificate from a centre accredited by the GCAA
- Submit their request
What are the regulations?
- Fly it within visual line of sight
- Never over populated areas
- Ensure maximum flying height of 400 feet (122 metres) above ground level is not crossed
- Users must avoid flying over restricted areas listed on the UAE Drone app
- Only fly the drone during the day, and never at night
- Should have a live feed of the drone flight
- Drones must weigh 5 kg or less
Jetour T1 specs
Engine: 2-litre turbocharged
Power: 254hp
Torque: 390Nm
Price: From Dh126,000
Available: Now
Results:
First Test: New Zealand 30 British & Irish Lions 15
Second Test: New Zealand 21 British & Irish Lions 24
Third Test: New Zealand 15 British & Irish Lions 15
Wicked: For Good
Director: Jon M Chu
Starring: Ariana Grande, Cynthia Erivo, Jonathan Bailey, Jeff Goldblum, Michelle Yeoh, Ethan Slater
Rating: 4/5
UAE%20SQUAD
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Company Profile
Name: JustClean
Based: Kuwait with offices in other GCC countries
Launch year: 2016
Number of employees: 130
Sector: online laundry service
Funding: $12.9m from Kuwait-based Faith Capital Holding
Auron Mein Kahan Dum Tha
Starring: Ajay Devgn, Tabu, Shantanu Maheshwari, Jimmy Shergill, Saiee Manjrekar
Director: Neeraj Pandey
Rating: 2.5/5
UAE currency: the story behind the money in your pockets
Terror attacks in Paris, November 13, 2015
- At 9.16pm, three suicide attackers killed one person outside the Atade de France during a foootball match between France and Germany
- At 9.25pm, three attackers opened fire on restaurants and cafes over 20 minutes, killing 39 people
- Shortly after 9.40pm, three other attackers launched a three-hour raid on the Bataclan, in which 1,500 people had gathered to watch a rock concert. In total, 90 people were killed
- Salah Abdeslam, the only survivor of the terrorists, did not directly participate in the attacks, thought to be due to a technical glitch in his suicide vest
- He fled to Belgium and was involved in attacks on Brussels in March 2016. He is serving a life sentence in France
UAE Rugby finals day
Games being played at The Sevens, Dubai
2pm, UAE Conference final
Dubai Tigers v Al Ain Amblers
4pm, UAE Premiership final
Abu Dhabi Harlequins v Jebel Ali Dragons
MATCH INFO
Uefa Champioons League semi-final:
First leg: Liverpool 5 Roma 2
Second leg: Wednesday, May 2, Stadio Olimpico, Rome
TV: BeIN Sports, 10.45pm (UAE)
