The rand was on a firmer footing at the start of what promises to be a busy week‚ dominated by central bank policy meetings.
The Reserve Bank’s monetary policy committee will deliver its decision on interest rates on Thursday after a three-day deliberation. The US Federal Reserve and Bank of Japan are also due to announce decisions on rates this week.
“As far as the rand is concerned‚ the general trend towards [getting] stronger ... continues‚” Standard Bank trader Warrick Butler said.
“We remain short dollars from last week based on our technical view and will add to this position on a break of R14.05/$ or a daily close below R14.10/$."
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The rand still managed to finish last week on a positive note despite the intense volatility that saw the currency swing from R14.21/$ to 14.59/$.
Rand Merchant Bank currency analyst John Cairns attributed the rand’s relative strength to the unwinding of the political risk premium that was attached to uncertainty over the future of Finance Minister Pravin Gordhan following the investigation by the Hawks elite unit.
"The rand continues to outperform massively. It was one of only three liquid currencies to gain against the dollar last week and has gained around 4% versus its compatriot risk currencies‚" Cairns said‚
"Effectively‚ this represents the local risk premium being unwound: more than half of the blowout since the latest Hawks-Gordhan story has been reversed."
At 8.50am‚ the rand was at R14.1184 against the dollar from Friday’s R14.2625
It was at R15.7632 against the euro from R15.9070 and at R18.4220 against the pound from R18.5465.
The euro was at $1.1164 from $1.1153 previously.
– TMG Digital/BDlive
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