South African rand hits 16-month high against U.S. dollar
South Africa’s rand touched a 16-month high against the dollar early on Wednesday on improved risk appetite with investors eyeing a new batch of domestic and U.S. economic data for fresh catalysts.
Again, South Africa’s rand edged higher on Monday, lifted by improved risk sentiment globally as fears receded over the impact of U.S. President Donald Trump’s trade policies.
In August 2016, the rand was at 10 months high.
South Africa’s rand hit a fresh 10-month high against the dollar in early trade then as emerging markets continued to gain against the U.S. currency.
The media reported that the rand continued to benefit from the results of the local municipal elections which saw the ANC weakened substantially, losing several major metros.
Media noted that the rand touched R13.3520 versus dollar earlier in the session, its strongest level since October 23, 2015. By 9.30 a.m., it was trading at R13.38 against the U.S. currency.
The rand was flat against the pound and euro trading at R17.40 and R14.91 respectively.
Adam Phillips of Umkhulu Consulting said that weak U.S. productivity numbers for the April to June period also supported emerging market currencies as reported by the media.
He said the market did not seem to consider what coalitions were going to come about because of the local elections.
“In terms of charts and technicals, there seems to be little support until we get to 13.10 on the
ZAR.
ZAR.
“Given where we have been in 2016, this is an extraordinary move reminiscent of late December 2001 and all the way through 2002.”
Luis Costa at Citi Bank, however, said the local election results were “being read
as net positive by market participants because it is construed as a signal that President Zuma’s power is dwindling”.
as net positive by market participants because it is construed as a signal that President Zuma’s power is dwindling”.
The suggestion is that events like the axing of Former Finance Minister Nhlanhla Nene in
December 2016, are less likely to be repeated.
December 2016, are less likely to be repeated.
“The implications of this week’s election outcome are market-friendly,” said Costa.
(Reuters/NAN)
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