South Africa Central Bank Has Little Policy Space to Boost Growth

South Africa Central Bank Has Little Policy Space to Boost Growth

JOHANNESBURG (Capital Markets in Africa) – South Africa has limited space for counter-cyclical monetary policy to support economic expansion because inflation risks have increased, central bank Governor Lesetja Kganyago said. The balance of risks for growth in consumer prices is “on the upside,” with the rand weakening against the dollar, a higher oil price, and a chance that power prices will increase, he said in an interview Friday in New York with Bloomberg TV. The Monetary Policy…

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South Africa’s Rand Slumps as Ramaphosa Speculation Raises Risks

South Africa’s Rand Slumps as Ramaphosa Speculation Raises Risks

JOHANNESBUR (Capital Markets in Africa)- South Africa’s rand led emerging-market currency declines against the dollar amid speculation that President Jacob Zuma is preparing to fire his deputy Cyril Ramaphosa days after removing another critic from his cabinet. The rand dropped as much as 1.3 percent and traded 1.1 percent weaker at 13.6309 per dollar by 9:37 a.m. in Johannesburg, bringing its slump this week to 2.7 percent, the most since the five days ending Aug….

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South African Yield Closing in on Turkey Shows Downgrade Fears

South African Yield Closing in on Turkey Shows Downgrade Fears

JOHANNESBURG (Capital Markets in Africa) – The shrinking yield discount on South African dollar bonds relative to Turkish debt is a sign investors are pricing in another credit downgrade for Africa’s biggest economy, according to Standard Bank Group Ltd. The 10-year spread has narrowed to 19 basis points, from 120 basis points in January. While Turkey’s yield has dropped amid demand for emerging-market assets, South Africa’s tracked sideways as political and fiscal challenges mount.  “The…

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Rand Bulls Snub Risks as ING Sees South African Currency Rising

Rand Bulls Snub Risks as ING Sees South African Currency Rising

JOHANNESBURG (Capital Markets in Africa) – Analysts at Rand Merchant Bank and ING Groep NV predict the South African currency, the second-worst emerging-market performer in the past month, will rebound against the dollar by year-end as the pull of improving fundamentals and the hunt for yield support buyers amid lingering political and fiscal risks. The rand fell to a six-month low of 13.8618 per dollar this week as tepid economic growth, an African National Congress leadership…

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Investors Undeterred by Risks as South Africa Bond Inflows Soar

Investors Undeterred by Risks as South Africa Bond Inflows Soar

JOHANNESBURG (Capital Markets in Africa) – Political turmoil, the risk of a widening budget deficit, a weakening currency and the prospect of a credit downgrade to junk would usually put investors off a country’s bonds. Not when it comes to South Africa. The lure of the highest yields among emerging-market peers is proving irresistible, with foreign investors buying a net 18 billion rand ($1.3 billion) of South African bonds in September, the most in a month…

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Rate-Cutting Race Among BRICS Outliers Pits Russia, Brazil

Rate-Cutting Race Among BRICS Outliers Pits Russia, Brazil

LAGOS (Capital Markets in Africa) – The race to ease monetary policy in Russia and Brazil may come down to factors neither of the central banks can control. Even after months of rate cuts, the two economies continue to endure some of the world’s highest borrowing costs when adjusted for inflation. While both countries are still consumed by crises as they try to put two years of recession behind them, the political turmoil gripping Brazil leaves its central bank facing a tougher task ahead, according…

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Rand, Bonds Fall as South Africa Junk Rating Triggers Index Exit

Rand, Bonds Fall as South Africa Junk Rating Triggers Index Exit

JOHANNESBURG (Capital Markets in Africa) – South Africa’s rand and dollar bonds fell after Fitch Ratings Ltd. became the second company to cut the country’s credit assessment to junk, triggering sales by some investors tracking investment-grade debt indexes. JPMorgan Chase & Co. said it would remove South Africa from gauges tracked by $59 billion of funds. President Jacob Zuma plunged South Africa into a political crisis when he fired Finance Minister Pravin Gordhan in a cabinet purge just after midnight on…

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