On Wednesday, after almost three months, the rand traded again for less than R17 against the dollar for the first time.
The currency took almost an hour to weigh in on whether or not to take this big step. It then traded at R16.97 against the dollar.
However, it broke through that level shortly before 12:30 for the first time since March 17.
Andre Botha, a senior trader at currency broker TreasuryOne, wrote in a note early Wednesday morning that expectations that the global economy would start to recover soon would cause stock markets to rise while the dollar was under pressure.
Botha has already said that he expects the rand to strengthen against the dollar by the R17 level. He says there is a chance that over time the rand could strengthen to around R16.63.
The rand also strengthened against the British Pound (R21.39) and the euro (R19.03).
It’s not just the rand that reached a major milestone on Wednesday.
For the first time in almost three months, the oil price traded again above $ 40 a barrel on Wednesday morning. However, it fell back to $ 39.32 a barrel by 12:30.
Brent crude last traded at more than $ 40 a barrel on March 6.
The price then tumbled to $ 33.38 a barrel over a single weekend. It reached a low of $ 19.62 by April 21.
The main reason for the collapse in prices was because there was a huge oversupply of oil worldwide, just as countries worldwide closed their borders and imposed a ban on travel on the Covid 19 pandemic.
The low oil price was good news for South Africans as fuel prices dropped for several months.
By May 1, fuel prices have reached their lowest level in almost four years.
95-octane gasoline then cost R12.22 per gallon in Gauteng and R11.52 on the coast, while diesel fuel (0.05% sulfur) cost R11.09 per liter in Gauteng and R10.48 on the coast.
However, with the oil price starting to rise steadily since the beginning of May, and with the rand trading for more than R18 to the dollar for most of this month, these low prices were of short duration.
The price of petrol increased today (June 3) by R1.18 per liter and that of diesel by 21c per liter.
In Gauteng, 93-octane petrol now costs R13.20 per liter and 95-octane R13.40.
Diesel’s wholesale price is R11,30 for a sulfur content of 0,05% and R11,38 for a sulfur content of 0,005%.
On the coast, 95-octane petrol now costs R12.70 and diesel’s wholesale prices are R10.70.
Bloomberg reports that as countries lift the state of containment due to the pandemic, which in particular allows air transport to come back into operation, so does the demand for oil and back the price.
It also appears that members of the Organization of Petroleum Exporting Countries (OPEC) and its partners are likely to continue to limit their oil production, precisely to get rid of the excess oil on the market.
The rising oil price is good news for petrochemical giant Sasol. Sasol’s share price on the JSE rose almost 13% to R132.54 on Wednesday.
It is also the first time since March that its shares are trading above the R120 level.
Sasol locally produces coal from Mozambique’s coal and natural gas, but its price is based on international oil prices and is subject to the rand-dollar exchange rate.
So its earnings are related to the dollar price of oil.
* This article has been updated since publication to reflect the latest figures.