Rand recovers slightly as risk events loom
The rand was firmer against major global currencies on Monday afternoon, faring best against the pound amid ongoing Brexit developments.
UK prime minister Theresa May is fighting to keep her position. The UK parliament is expected to vote at midnight SA time on whether it should take over Brexit negotiations.
Emerging-market currencies, including the rand, were recovering slightly after sharply weakening on Friday. The Turkish lira led the gains on Monday, bolstered by promises from that country’s central bank to intervene to support the currency.
At 2pm the rand was 0.45% stronger at R19.0793 to the pound, 0.2% at R14.4678 to the dollar and 0.14% at R16.363 to the euro. The euro was 0.12% up at $1.131.
Local focus is on the latter part of the week. The Reserve Bank is due to give an update on its monetary policy stance on Thursday, while Moody's Investors Service will update its stance on SA’s creditworthiness on Friday.
The Moody’s decision is touch-and-go, and it would appear that given Eskom's financial unravelling, SA's fate is sealed, said Rand Merchant Bank analyst Nema Ramkhelawan-Bhana. However, there are also indications that Moody's will grant SA a reprieve, at least in the short term, to allow structural reforms to take effect.