The rand con­tin­ues to gain ground

The Star Early Edition - - PRICES - Ka­belo Khu­malo

THE SOUTH African rand yes­ter­day con­tin­ued its rally against the US dol­lar as the lo­cal cur­rency con­tin­ued to take the shine from last week’s un­changed rat­ings from Fitch and S&P’s Global Rat­ings, as the green­back sold off after Fri­day’s dis­ap­point­ing US jobs data.

The lo­cal cur­rency strength­ened to a high of R12.69 against the dol­lar from the pre­vi­ous ses­sion close of R12.78, while it opened trade at R14.29 against the euro from R14.29 in the pre­vi­ous ses­sion and was flat against the Bri­tish pound at R16.35 from Fri­day’s close of R16.39.

This marked a sharp re­trace­ment from the R13.20 seen last week on Wed­nes­day.

John Cairns, an an­a­lyst at Rand Mer­chant Bank, said that we can ex­pect the rand to con­sol­i­date in the up­com­ing trad­ing ses­sions, but ex­pected volatil­ity to­wards the end of the week.

“The rat­ings up­dates are not a game changer, though they have brought some re­lief. The rand was favoured by the week dol­lar and new highs on Wall Street,” Cairns said.

More po­ten­tial weak­ness for the dol­lar was ex­pected on Thurs­day when the former head of the FBI James Comey gives tes­ti­mony to the Se­nate about al­le­ga­tions that the Rus­sian gov­ern­ment in­flu­enced the elec­tion of Don­ald Trump as pres­i­dent of the US last year.

In­vestec econ­o­mist Annabel Bishop said while the rand strength­ened after Fitch and S&P’s left the coun­try’s rat­ings un­changed, the neg­a­tive out­look by S&P’s sig­nalled fur­ther down­grades for South Africa’s sovereign debt.

“Fitch’s out­look re­mains sta­ble, mean­ing no fur­ther rat­ings ac­tion is be­ing con­sid­ered. S&P’s main­tained its neg­a­tive out­look, sig­nalling the next move will likely be a down­grade,” Bishop said.

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