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Watching the numbers

22 May 2006 Angelo Coppola

The rand weakened sharply against major currencies over the past week amid global market volatility, plunging commodity prices and negative sentiment towards emerging market currencies.

The local unit depreciated to R6,53, R8,25 and R12,29 against the US dollar, the euro and the British pound respectively from R6,22, R8,14 and R11,80 in the previous week.

The local bond market followed the rand weaker, with the yields on the R194 2008,

R153 2010 and R157 2015 jumping to 7,38%, 7,50% and 7,71% respectively compared with 7,27%, 7,37% and 7,60% a week earlier.

Local equity markets were dragged down by weak international markets, with the FTSE-JSE all share index plummeting by 7,3% to close at 20 199,8 on Friday. Basic materials lost a massive 10,3% to end the week at 20 368,4 on the back of large falls in the gold and the platinum indices (down 12,2% and 9,1% respectively).

Industrials and financials were also down by 5,1% and 4,1% respectively to close the week at 16 782,2 and 18 812,4.

Key economic releases due this week include Aprils consumer and producer inflation numbers, due on Wednesday and Thursday respectively. The Economic Unit expects CPIX inflation to remain at 3,8% y-o-y (up 0,5% m-om), while headline consumer inflation is forecasted to ease slightly to 3,3% y-o-y (up 0,5% m-o-m) from 3,4% y-o-y in March.

These forecasts are in line with the consensus forecasts. The Economic Unit further expects that producer inflation eased to 5,1% y-o-y (up 0,6% m-o-m) from 5,4% y-o-y in the previous month. This is slightly below the consensus forecast of 5,2% y-o-y.

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