Rand ben­e­fits from a re­bal­anc­ing econ­omy after Brexit

Weekend Argus (Saturday Edition) - - LIFE -

THE RAND and stocks firmed along­side other emerg­ing mar­ket as­sets yes­ter­day as in­vestors bet that lead­ing cen­tral banks would keep rates low to min­imise the dam­age to the global econ0my after Bri­tons voted to exit the EU.

A hint from the Bank of Eng­land on Thurs­day that in­ter­est rates would be cut in the com­ing months gave risk ap­petite a fur­ther boost and strength­ened the view that the US Fed­eral Re­serve would hold rates in the com­ing months.

“Al­though there is still a lot of un­cer­tainty about what (Brexit) might mean, in­vestors are fo­cus­ing on the fact that it could po­ten­tially trig­ger more pol­icy eas­ing from ma­jor global cen­tral banks,” ETM mar­ket an­a­lyst Jana van Deven­ter said.

“Some ad­di­tional sup­port for the rand stems from the trade data we saw yes­ter­day, it shows the econ­omy is re­bal­anc­ing which is bullish for the rand.”

On Thurs­day Sars re­ported a big­ger-thanex­pected trade sur­plus of R18.73 bil­lion in May, after April’s R127 mil­lion short­fall.

The trade data au­gurs well for South Africa’s cur­rent ac­count, which has tra­di­tion­ally been a source of vul­ner­a­bil­ity for the rand and widened to 5 per­cent of GDP in the first quar­ter of the year. – Reuters

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