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Confidence of consumers to the US economy plummeted for the last month of 2019. This was despite the record-breaking figures from US indices, signing of US-China phase one trade deal, and holiday events. Data showed figures from the Conference Board (CB) Consumer Confidence report sliding to 126.5 points from 126.8 in November. This is also lower from the 128.2 points that analysts were expecting. Sweden, on the other hand, ended its five (5) year experiment of a negative interest rate. Sweden is one (1) of the only four (4) countries with a negative interest rate, including Denmark, Japan, and Switzerland. Riksbank raised its benchmark interest rate from negative 0.25% to a flat zero (0). Meanwhile, 2019 has been the year of rate cuts for the Federal Reserves. The US central bank cut rates three (3) times this 2019 and analysts expected to trend to continue in 2019 amid the fears of looming recession on the US economy.
Money Supply in South Africa increased by 7.35% in 2019. This was higher than 2018’s growth of 7.28% and analysts’ expectations of 7.20%. The more money in circulation, the lower the value of money, and in this case, a weak South African rand. This is expected to send SA’s currency at the start of 2020. Meanwhile, South African Reserve Bank lent lower money for the year at 6.60% from 7.28% in 2018, and lower from 7.38% expectations. These reports are a double whammy for the rand. South Africa was hit by the US-China trade war this year as increasing loans from China made the African economy to be heavily exposed to the Asia’s biggest economy. Despite this, rand investors and traders were optimistic that South Africa’s economy will recover in 2020 as Russia assumes the presidency of the BRICS (Brazil-Russia-India-China-South Africa), an association of five (5) major emerging national economies.
20 is the lucky number of Russia. Today, December 31, marks President Vladimir Putin’s 20 years of leadership in Russia. 2020 will also be favorable to Russia as it assumes presidency of the group of five (5) emerging economies known as BRICS (Brazil-Russia-India-China-South Africa). The Eurasian Customs Union will also celebrate its 20th founding anniversary this year. In 2019, the Eurasian Economic Union also made headlines following its planned expansion in Tajikistan. The union includes former Soviet satellite states as its members. The rising economic influence of Russia will increase the demand for rubles. Russia also reported its highest holding of US dollar as foreign reserve this year. This means that Russia holds a portion of US debts which it could use to its advantage. In 2019, the US introduced a series of sanctions against Russia, which resulted in the weakening of the Russian economy.
A day before the second imposition of US tariffs to Chinese exports, the two (2) largest economies in the world agreed to sign a phase one trade deal. The aim was to end the year-long trade war that disrupted the global financial market. The deal will take effect next year. This is expected to give US dollar investors and traders a renewed hope that the US will be able to continue the longest expansionary period in US history by 2020. The decision by Sweden to leave the negative interest rate territory is also impacting the demand for safe-haven currencies like Swiss Franc. Riksbank increased its benchmark interest rate from negative 0.25% to a flat zero (0), leaving Denmark, Japan, and Switzerland as the remaining countries with negative interest rates. Pressure to Swiss National Bank to lift its rates also increases as the analysts were shuttered by a strong US economy. Analysts have previously predicted a recession in America between 2018 and 2019.