Rand is in for a bumpy ride

THE RAND has started off the week making some gains, but Dynamic Outcomes head market analyst James Paynter said a bumpy ride should be expected as this could not be one-way traffic.

Bianca Botes, corporate treasury manager at Peregrine Treasury Solutions, said a rapidly tightening labour market in the US could see inflation come under pressure and add pressure to the US Federal Reserve to hike interest rates.

“The potential for this hike currently outweighs the trade wars at play. The rand is expected to remain vulnerable with the key level remaining at R12.73 to signal a break weaker,” said Botes.

At 5pm yesterday, the domestic currency was bid 8c firmer than Friday’s same time bid at R12.57 a dollar. Against the pound sterling the rand was 10c stronger at R16.75 and to the euro, the currency strengthened 5c to R14.70.

Senior currency dealer at TreasuryONE, André Botha said: “South Africa’s first-quarter gross domestic product number would be released this week, with expectations that the number will be a bit softer than in the fourth quarter.

“This could have a negative impact on the rand should the number disappoint, but for the most part the rand will be tracking the US dollar.”

On the JSE the blue-chip top 40 index added 1.04% to 51 404.55 points, while the broader all-share index gained 1.03% to 57 870.89 points.

Top gainers on the bourse included Sanlam which grew 4.36% to R81.42, followed by Steinhoff Africa Retail which was 4.24% higher at R17.46. FirstRand increased 3.92% to R63.65.RMB Holdings gained 3.88% to R77.08.