Robust rand races to under R13,40/US$

12 Aug, 2016 - 00:08 0 Views
Robust rand races to under R13,40/US$

The ManicaPost

The rand raced on Wednesday morning to levels last reached in the fourth quarter of 2015 against the US dollar.

By 07:10 the local unit was trading at R13,37/$ from R13,66 on Monday and an overnight close of R13,41 in New York. Tuesday was a public holiday in South Africa.

Against the pound and euro the local unit was trading at R17,47 and R14,91 respectively, levels last seen in the first quarter of 2013.

The rand, however, was clearly not on its own in moving stronger, with many other emerging markets tagging along, with the moves also exaggerated due to the holiday season in Europe, said Adam Phillips of Umkhulu Consulting in his daily currency report.

Weak US productivity numbers for the April to June period also supported emerging market currencies.

He said the market does not even seem to consider what coalitions are going to come about because of the local elections.

“In terms of charts and technicals, there seem to be little support until we get to 13,10 on the ZAR. Given where we have been this year, this is an extraordinary move reminiscent of late December 2001 and all the way through 2002.”

Phillips said the last couple of months have seen very sobering forex rates for exporters, “while importers have been happy to cover commitments on the concern that at any time a sudden reversal might happen”.

“This has just not come through at all, although in my opinion importers must keep buying it down.”

Rand in massive gain against US dollar

The rand remained at its multi-month highs against the dollar on Wednesday morning after gaining a further 30c against the greenback in the past two days.

The local currency strengthened to R13,35 to the dollar, the best level since October, as it continued on the rally that took hold in June.

“For the importers, they are jubilant with the current R13,40 to the dollar level and should be looking for long-term cover at this stage,” TreasuryOne dealer John Moni said.

Stoking the latest rally in the rand was a weaker dollar and the pick-up in commodity prices that lifted platinum to about $1 187,5/oz — its best level since March 2015.

The stronger currency eases inflation, taking the pressure off the Reserve Bank, which has hiked interest rates by a cumulative 75 basis points in 2016.

Analysts have partly attributed the resilience in the local currency to positive sentiment that flowed from the peaceful local government elections last week.

At 9.01am‚ the rand was at R13,4283 to the dollar from R13,4142 at the previous close.

It was at R14,9623 against the euro from R14,9136 previously‚ and at R17,4984 against the pound from R17,4451 previously.

The euro was at $1,1143, from $1,1118 at the previous close. — Fin24.

Share This:

Sponsored Links

We value your opinion! Take a moment to complete our survey

This will close in 20 seconds