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South Africa: Economists want Ramaphosa to boost economy.

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Economists are hoping to see stability and better economic growth in South Africa under the presidency of Cyril Ramaphosa.

As the nation’s Finance Minister Malusi Gigaba prepares to present the 2018 budget on Wednesday,the economists also want to see a strong rand.

“We need to drive growth in this country.” We are struggling along the way in 2017. It’s more than 1.8% in 2018. To create job creation, we need to drive growth closer to 5%,” said economist Ken Swettenham.

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The election of Cyril Ramaphosa to lead the continent’s largest industrial power was greeted with relief by the markets, while the Zuma era was marked by rising debt, sluggish growth, record unemployment 27.7% and a deterioration in the country’s financial score.

The African National Congress pushed him towards the exit in order to avoid a catastrophe in the general elections of 2019.

But the task of Cyril Ramaphosa promises to be complicated.

For  Economist Ken Swettenham the Southern African nation needs economic stability.

‘‘I think that’s the most important point. stability, we do not know in what sense our markets will evolve: a rise one day, a decline the next day.Our currency is weak one day and strong the next day.Also for our mandatory markets.We have not had stability and it is very difficult to predict anything when you are a businessman, a common citizen and even for the government “,he said.

“It’s going to be the toughest budget since the advent of democracy” in 1994 in South Africa, predicted Piet Naude, a professor at Stellenbosch University.

President Ramaphosa will have to find sources of income while drastically reducing state spending, while he has committed himself to respect one of the most expensive commitments of his predecessor, namely free education higher education for students from disadvantaged families.

In a speech to Parliament Friday, the day after his election, he promised to commit the country to “a new path of growth, employment and transformation.“

Among his immediate priorities, he cited youth employment, whose unemployment rate is close to 50%. He also pledged to restore the confidence of investors and markets, which sanctioned the end of the reign of Jacob Zuma by the degradation of the financial score of the country.

Shortly before his accession to power, Cyril Ramaphosa had expressed his reluctance on a very expensive and controversial project to build new nuclear power plants in his country, ardently defended by Jacob Zuma.

Cyril Ramaphosa, a former businessman, is enjoying the immediate confidence of markets that “think it’s good for the economy,” according to Ken Swettenham, a financial analyst for Liberty Life Insurance Company. Since his election, the national currency, the rand, has recovered.

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South Africa Rand stables against embattled pound

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The rand was relatively stable on Friday morning, and headed for its best week against the beleaguered pound in about nine weeks.



The fallout from the failure of the UK’s Brexit plan is on traders’ radars, overshadowing the controversial and divisive land reform debate, which has previously hurt the rand.

“May has seen her plans for ‘Shmexit’ torn apart: that is what one could dub a Brexit that is literally leaving the EU, but which in no way regains sovereignty in key areas, and which might be impossible to ever change further unilaterally,” UK-based Rabobank International analyst Michael Every said in a note.

“Indeed, we have seen a swathe of key ministerial resignations, and suggestions there are enough MPs’ votes in hand to trigger a leadership election as soon as next week.”

The pound tanked against a host of currencies on the news, but has since stabilised at lower levels as markets await further developments.

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The rand has benefited from the ensuing market volatility, settling a hefty 3% stronger against the pound on Thursday night. Local bonds have benefited, too.

The local currency has fared better against the dollar so far this week, strengthening the case for a big cut in fuel prices in December.

According to AA, the petrol price is likely to be cut by R1.54 a litre, diesel by 92c and illuminating paraffin 85c.

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The expected drop in fuel prices comes as oil prices fall: Brent crude is about 10% lower in November, according to Iress data.

At 10.12am, the rand was 0.2% softer against the dollar at R14.2075, 0.32% weaker against the euro at R16.12 and 0.36% softer against the pound at R18.1858. The euro was 0.14% stronger to $1.1346.

The yield on the benchmark R186 bond slipped to 9.145% in early trade, from 9.17% at its last settlement.

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Uganda Shilling Fares Well than past week.

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The Uganda Shilling was relatively stable, trading within range of 3747/57 as market demand was evenly matched by the inflows.




In the interbank money market, overnight funds traded at 6.50% while one week traded at 10%, a report by Alpha Capital Markets indicates.

The Shilling closed the week at around 3,744.88/3,754.88 to the US Dollar, up from 3,748/58 last week buying and selling.

In the fixed income market, a treasury bill auction with sh195bn on offer was held. Yields marginally declined across all the tenors and came out at 10.800%, 12.400% and 13.501%, for the 91, 182 and 364 days. The auction was hugely oversubscribed.

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In the regional currency markets, the report further indicates that the Kenya Shilling was quickly coming under pressure due to increased demand from importers of oil and other commodities as they close out payments for orders ahead of the festive season.

The Kenya and Tanzanian currencies traded at 36.77/36.87 and 1.63/1.64 buying and selling respectively.

Stephen Kaboyo the Alpha Capital Markets CEO, said that in international markets, the US Dollar gained against other major currencies as the Federal Reserve kept interest rates steady but reaffirmed its monetary tightening, setting the stage for a rate hike in December.

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On the other hand, Kaboyo added that the US midterm elections outcome that markets interpreted as a gridlock on Capitol Hill, came in support of the greenback with expectation that chances of further fiscal stimulus and tax cuts will be minimal.

“Outlook for the shilling indicate a range bound unit as mid-month market dynamics set in. It is likely that demand will remain at a low ebb,” he said.

Dealers attributed the performance of the Shilling to liquidity squeeze in the money markets.

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-NewVision

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