Headlines

  1. Rand falling prey to global worries fuels SA inflation.
  2. SA Tourism sector lost R164bn in spending by visitors in 2020.
  3. Brent rises to highest since 2018 on global energy crunch.
  4. Fuel shortages pressure Johnson as the UK crisis escalates.
  5. Currencies: USD/ZAR-R15.01, EUR/ZAR-R17.54, GBP/ZAR-R20.56

South Africa

  1. The rand is taking a bigger hit than most of its emerging-market peers as an energy crisis and Chinese growth concerns batter the South African currency and worsen the country’s inflation outlook. The currency declined for a second day on Monday to its weakest level in more than a month as oil prices soared, while traders fretted over China’s growth hurdles and how that would affect prices of the raw materials that account for close to half of South Africa’s exports.  The weaker currency, along with crude-oil prices at the highest in more than two years, pushed breakeven rates, which reflect bond investors’ expectations of price rises, to levels last seen in June 2019.  “Sentiment still seems very nervous and there is a lot to absorb,” said Matete Thulare, an analyst at Rand Merchant Bank in Johannesburg. It’s “safe to assume that the risk bias remains for rand weakness,” he wrote in a client note. (Moneyweb.co.za)
  2. South Africa’s tourism sector lost an estimated R164 billion in spending by domestic and inbound visitors to the country in 2020 because of the Covid-19 pandemic. The Bureau for Economic Research (BER) at the University of Stellenbosch said on Monday the number of jobs supported by South Africa’s tourism industry declined by 960 000 to 640 000 in 2020 from 1.6 million in 2018 as spending by domestic and inbound visitors slumped to R109 billion in 2020 from R273 billion in 2018.  It based the estimated expenditure by domestic and inbound visitors on the decline in visitor ratios and then applied it to 2018 tourist expenditure data, the most recent available data.  The bureau said internal tourism expenditure totalled R273 billion in 2018, with domestic spending representing the bulk of this spending at 56.1%.  (Moneyweb.co.za)

Global

  1. Brent closed at the highest in nearly three years amid signs the crude market is rapidly tightening from a global energy crunch. The global benchmark crude surged 1.8% on Monday, but met some resistance as it neared the key, psychological $80-a-barrel level. Its US counterpart rose 2% to close above $75 a barrel for the first time since July. Both benchmarks are set to continue climbing as supply struggles to catch up with fast-rising demand, according to Trafigura Group’s co-head of oil trading Ben Luckock. His remarks came as Goldman Sachs Group Inc. said Brent could hit $90 by year-end as the market is in a bigger deficit than many realise. (Moneyweb.co.za)
  2. Prime Minister Boris Johnson is under increasing pressure to do more to ease a supply chain crisis in Britain after pumps ran dry at some gasoline stations because of panic buying. With a shortage of truck drivers raising the prospect of widening disruption to food and fuel deliveries in coming weeks, the government moved late on Sunday to temporarily suspend competition rules and allow companies to coordinate fuel supplies to the most affected regions.  That came after Johnson announced measures including a u-turn on relaxing immigration rules for foreign truckers and poultry workers and called in army examiners to help ramp up driving tests for heavy goods vehicles. The prime minister is considering plans to use soldiers to drive tankers around the country, the Financial Times reported, citing unidentified officials.  “We have long-standing contingency plans in place to work with industry so that fuel supplies can be maintained and deliveries can still be made in the event of a serious disruption,” Business Secretary Kwasi Kwarteng said.  Businesses and opposition politicians said the 5,000 new visas for haulers until Christmas would barely scratch the surface of a 100,000 shortfall that’s been exacerbated since the U.K. left the European Union. Ruby McGregor-Smith, president of the British Chambers of Commerce, likened the visas to “throwing a thimble of water on a bonfire.” (Moneyweb.co.za)

Chart of the week

When will your country recover to pre-pandemic levels of GDP per capita? (VisualCapitalist.com)

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