Rand benefits from a rebalancing economy after Brexit

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