Rand remains range bound, JSE advances
THE RAND firmed slightly during intraday trade yesterday but remained range bound as the market continued to look to the ANC for clues on President Jacob Zuma’s fate.
The domestic currency opened at R12:35 yesterday before strengthening to R12.29 just after midday compared with Friday’s 5pm bid of R12.4186 to the dollar.
The market is looking for direction from the ruling party and according to Peregrine Treasury Solutions’ Bianca Botes, the ANC needs to offer strong pro-economic growth policies to balance the reaction to populist policies demanded by those aligned to Zuma and ensure some economic recovery.
Rand Merchant Bank currency strategist John Cairns said in his podcast yesterday that the rand started the year trading sideways, caught between surging global asset prices and a weak dollar on the one side, and a feeling that the December rally went too far on the other.
“Very thin liquidity over the past weeks might account for some of this but the bigger reason for the caution is that the markets did exceptionally well in December and there is a view that exuberance might have been overdone,” said Cairns.
At 5pm the rand was bid at R12.3104 to thhe dollar, 10.82c higher than at the same time on Friday.
Carins said event risk this week was moderately high with returning liquidity being the focus for early week while local politics, the monetary policy committee, China and US politics would dominate the rest of the week.
“A lot of the political risk that the SA Reserve Bank was worried about last year has eased and the rand has strengthened very well. But caution is still high given the problems with the budget, the high risks of another ratings downgrade that spurs would-be outflows and the surge in the oil price to $70 a barrel,” said Cairns.
Meanwhile, on the equites market, the all share index increased 0.26 percent to 60 240.96 points, while the benchmark Top40 index gained 0.25 percent at 53 431.53 points.
Among the top movers were Sandown Capital, up 4.92 percent to R3.20, AngloGold Ashanti, which gained 4.4 percent to R139.90 and Northam Platinum, which rose 4.2 percent to R57.58.