ENCOURAGING PRIVATISATION STATEMENTS HELPS THE RAND TO BELOW R10
TO THE DOLLAR
Thursday’s announcement by Public Enterprise Minister J. Radebe that the government
had sold 30% of the state-owned arms company Denel to Britain’s BAE Systems for R375m
was seen as evidence of the country’s commitment to privatisation. Radebe said that
privatisation has raised some R26.8bn since 1997. He also said that the remaining 70% of
Denel would remain in state hands for the time being, but did not rule out the possibility
of an IPO in the future. Radebe also confirmed that due to improved market conditions, the
stage was now satisfactorily set for the Telkom IPO later this year. These positive
statements, which suggest that this year’s privatisation earnings target of R12bn is
still on track, encouraged the Rand, which together with the assistance of a rampant Euro,
helped the local unit penetrate the psychological R10.00=$1 on Friday afternoon. Not only
was Friday’s R9.94=$1 the week’s high, but it was also the Rand’s strongest
level against the greenback since November last year. On a trade-weighted basis the Rand
has appreciated by an impressive 16.5% for the year to date and by 32% since its low point
on 20th December. Bonds yields declined in response to the Rand’s
strength, but failed to improve on Tuesday’s lows of 11.74% and 11.71% for the R150
and R153 respectively, despite the Rand’s new highs on Friday. This suggests that
some caution entered the market late in the week ahead of next week’s inflation
numbers. |
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