RISE IN RISK APPETITE HELPS RAND TO END WEEK ON HIGH

THE RAND ended last week on an 11-week high after breaking below R17 to the dollar on an increase in investors’ risk appetite. The rand closed on Friday at R16.86 to the dollar, R21.46 to the pound, and R19.07 to the euro, much stronger than on Wednesday, when it dipped below R17 for the first time since March 18. Old Mutual investment strategist Izak Odendaal said the rand’s gains had more to do with global factors than any domestic reasons. Odendaal said the global outlook was a bit more positive now compared to

April and May. “The rand’s strength is mostly just a shift in global risk appetite, as is normally the case. We have seen global markets rallying quite a bit on the weakness in the dollar,” Odendaal said. The rand has appreciated by more than R2 to the dollar since it breached the

R19 level twice in April after the country’s credit rating was downgraded to subinvestment grade and the economy entered a recession. Investec’s Kamilla Kaplan said the easing of the lockdown was positive for the markets. “The largescale monetary and fiscal programmes from the major global central banks and government, as well as expectations of improved economic conditions as economies open from lockdowns, have supported risk appetite and aided portfolio flows to emerging markets so far in June,” she said. “This has supported the strengthening of the rand to an average of R17.08 a dollar in June… from an average of R18.15 in May.” |