African FX Risk |

No Looking Back for S. African Rand as Bears Lose Conviction

JOHANNESBURG (Capital Markets in Africa) – Rand bears are on the retreat as South Africa’s currency heads into 2019. The currency got off to a blistering start to the year, adding 3 percent amid receding worries over the U.S.-China trade war and the Federal Reserve’s second thoughts about policy tightening. And in a sign investor are leaving last year’s 14 percent slump behind them, some bearish indicators back at levels last seen before Turkey’s meltdown in August….

Rand Traders Brace for Turmoil as Turkey Saps Risk Appetite

Posted on by The Editorial Team

JOHANNESBURG (Capital Markets in Africa) – Traders are positioning for more turmoil for the rand as Turkey’s financial crisis damps risk appetite among emerging-market investors. The rand’s one-month implied volatility against the dollar soared by the most since December 2015 on Monday. The South African currency plunged by the most in about a decade during Asian trading hours, but has since pared its decline. The yield on benchmark government bonds climbed above 9 percent for…

Carry Trades With Emerging FX Are Entering Bearish Momentum

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LAGOS (Capital Markets in Africa) – Emerging-market carry trades are losing their appeal and they could be in for more losses, if technical indicators are any guide. A Bloomberg gauge of carry trades in eight developing-nation currencies declined 1.7 percent since reaching the most since August 2014 on Jan. 25 amid the latest market turmoil that sent volatility to the highest level since 2015 this week. The carry-trade measure fell below the 21-day moving average on Wednesday. At…

OPEC’s Angola Ditches Dollar Peg as Kwanza Falls at Auction

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LUANDA (Capital Markets in Africa) – Angola devalued its currency as the OPEC member sought to revive an economy still reeling from the oil-price crash four years ago. The kwanza fell 11 percent to 187.95 per dollar by 3:35 p.m. in Luanda and depreciated 10 percent to 221.75 against the euro. The move came a day after the central bank allowed the currency to weaken in its first auction of foreign exchange since announcing it would end a dollar…

Rand’s on a High as Commodities, Politics and Greenback Team Up

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JOHANNESBURG (Capital Markets in Africa) – The stars are aligned for South Africa’s rand as it enters the new year. Not only are investors backing the currency on prospects that market favourite Cyril Ramaphosa may soon become the country’s leader, but the ailing dollar and rising commodity prices are playing along. The rand touched its strongest level in more than two years on December 28 and remained near that level on Tuesday. The Bloomberg Commodity Index climbed to a…

South Africa’s New Man Has a Daunting Task Pleasing Markets

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JOHANNESBURG (Capital Markets in Africa) – Investors got what they wanted in South Africa when Cyril Ramaphosa became the ruling party’s new leader, putting himself in prime position to be the nation’s next president. Now comes the difficult part. He’ll be hard pressed to turn around a struggling economy, avoid more rating downgrades and ease political tensions, according to AllianceBernstein LP and Credit Suisse Group AG. That means the rand will struggle to sustain the 14 percent…

Investment in Africa: Managing Currency Risk — Andrew Gillespie

Posted on by The Editorial Team

Volatility is not a new word for investors in Africa. Events of 2014 and this year across the continent highlight this – especially in the continent’s currency markets. Irrespective of the market, or country; be it via private equity, listed equity, fixed income, or underlying trade and capital flows – managing FX volatility and risk is a constant feature of the evaluation process. For most participants, it is often a frustrating, opaque and expensive exercise,…