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LILANGENI STRONGEST SINCE MARCH

26/05/2020 22:00:00 BY ASHMOND NZIMA

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MBABANE – The country’s currency Lilangeni has improved dramatically since late March.

Lilangeni had fallen closer to 20 mark against the US Dollar last month due to the impact of COVID-19.
Yesterday around noon it traded at 17.40 against the US Dollar, which is an eight-week high.

A depreciating Lilangeni makes imports, especially from abroad, expensive. It also becomes expensive for government to service external debt. The only major positive is in terms of exports.

The country’s stock of debt stood at E22.1 billion, an equivalent of 30.3 per cent of GDP at the end of April 2020. This indicates a marginal decrease of 4.3 per cent in total debt, compared to the end of March 2020. Public external debt has remained unchanged in the two months’ period, at E9.3 billion, as there were no movements in debt service, and draw down on loans. Public external debt currently stands at 12.8 per cent of GDP.

Pegged

Meanwhile, Moneyweb also reported resurgence for the Rand of South Africa. Under the Common Monetary Area (CMA), Lilangeni is pegged to the Rand. South Africa’s rand raced to its highest in more than eight weeks against the US dollar yesterday, as optimism about a global recovery from the COVID-19 pandemic boosted riskier assets, with investors looking past Sino-US trade tensions.

At 6:05 am yesterday , the Rand traded at 17.4700 per dollar, 0.91 per cent firmer than its previous close.
“The optimistic recovery narrative is holding within markets, keeping the Dollar subdued and seeing the rand remain on a stable footing following last week’s rally,” Bianca Botes, executive director at Peregrine Treasury Solutions, said in a note.

“While there are looming geopolitical risks, it seems as though markets are currently pushing them onto the back burner, and will likely continue to do so until there is a new escalation or increased threat.”

Japan’s decision to end coronavirus-induced restrictions and a survey showing German business morale rebounded in May lifted hopes of an economic recovery and helped offset a war of words between Beijing and Washington on trade, coronavirus and China’s proposals for stricter security laws in Hong Kong.

In South Africa, President Cyril Ramaphosa announced on Sunday a further easing of the country’s lockdown from June 1, allowing the vast majority of the economy to return to full capacity. The government was due to give more details yesterday.