Rand slightly softer, but remains on track for a good January
The rand was softer against major global currencies on Tuesday morning, but still on track for its best January since 1989, amid a cautious tone on global markets.
At 9:50am the rand was 0.31% softer at R13.7058/$, 0.42% weaker at R15.6756/€ and had depreciated 0.17% to R18.006/£. The euro was flat at $1.1437.
The local currency has appreciated almost 5% so far in January, boosted by the US Federal Reserve’s tilt towards a dovish stance, as well as some signs of progress in US-China trade talks.
Trade negotiations between the world’s two largest economies resume on Wednesday. This comes after US authorities imposed criminal charges on Chinese tech giant Huawei on Monday, threatening to escalate tension.
Markets are also watching the US Federal Reserve policy meeting on Wednesday, although the Fed is expected to retain its dovish tone.
“Market activity has been fairly subdued overall over the past couple of weeks and it feels like investors are still relatively tentative about where they want to put their money,” said Standard Bank currency trader Warrick Butler. The local currency is also continuing to find support in a firmer gold price, which has climbed back above $1,300/oz for the first time in seven months. Investor interest in safe-haven assets and dollar weakness have been cited as supporting factors.
Markets are also awaiting a vote in the British parliament on UK prime minister Theresa May’s “plan B” for Brexit on Tuesday afternoon. Analysts said recent pound strength reflected a belief in the market that a hard Brexit is increasingly unlikely, although some nervousness is creeping into trading as the vote approaches.