Share

Rand recovers after Fed support

Johannesburg - The rand rallied 0.6% against the dollar on Friday, strengthening with other emerging market assets and shaking off concerns about unrest in the mining sector after the US Federal Reserve announced a third round of monetary easing.

The rand gained to R8.2040 against the dollar at 07:04 GMT, after closing at R8.2440 in the previous session.

The currency reversed a 1% fall after the Fed said it would buy $40bn of mortgage assets every month until the US jobs picture improved.

"After yesterday's Fed announcement the dollar is under pressure across the board. We've had a surge in equities and commodities, so for the day we could see further strength in the rand," a local currency trader said.

The currency's next resistance level is around R8.15, the rand's previous low from earlier this week.

"The initial market reaction has been positive. The real test is whether it helps the US economy recover from its slumber, and from a rand perspective the multi-week or month issue is whether it will keep the dollar under pressure," Rand Merchant Bank said in a note.

Rand bears have retreated from R8.45 support in the previous session all the way to R8.1870 early on Friday.

Analysts say the confirmation of more US monetary stimulus shifts some attention away from South Africa's mining woes, and the rand will be temporarily allowed to join the global markets rally.

However, if the strikes sweeping across the mining sector intensify, the rand could be hit again.

Mining bosses at troubled platinum firm Lonmin [JSE:LON] have offered striking miners a wage settlement way below that demanded.

A violent rejection of that offer could weigh on local assets again, which have been under the cloud of the mining strife for the past five weeks.

"For the day we are looking for a R8.12 - R8.40 range - we've got to keep an eye on the mining and strikes. You've got to be cautious and wary of local events and headlines," the trader cautioned.

Government bonds gained, with yields falling 6 basis points to 5.43% on the three-year note and 6.61% on the 2021 issue.

Treasury will sell R800m spread over its 2025, 2038 and 2050 inflation-linked government bonds at 09:00 GMT.

Results are due after the auction closes and dealers expect interest in the longer bonds to be strong.


* Follow Fin24 on TwitterFacebookGoogle+ and Pinterest

 
We live in a world where facts and fiction get blurred
Who we choose to trust can have a profound impact on our lives. Join thousands of devoted South Africans who look to News24 to bring them news they can trust every day. As we celebrate 25 years, become a News24 subscriber as we strive to keep you informed, inspired and empowered.
Join News24 today
heading
description
username
Show Comments ()
Rand - Dollar
19.05
-0.8%
Rand - Pound
24.04
-0.6%
Rand - Euro
20.56
-0.4%
Rand - Aus dollar
12.37
-0.2%
Rand - Yen
0.13
-0.8%
Platinum
899.20
+0.3%
Palladium
999.25
-0.3%
Gold
2,209.51
+0.7%
Silver
24.55
-0.4%
Brent Crude
86.09
-0.2%
Top 40
68,080
+0.6%
All Share
74,278
+0.5%
Resource 10
56,967
+2.4%
Industrial 25
103,572
+0.3%
Financial 15
16,456
-0.4%
All JSE data delayed by at least 15 minutes Iress logo
Company Snapshot
Editorial feedback and complaints

Contact the public editor with feedback for our journalists, complaints, queries or suggestions about articles on News24.

LEARN MORE
Government tenders

Find public sector tender opportunities in South Africa here.

Government tenders
This portal provides access to information on all tenders made by all public sector organisations in all spheres of government.
Browse tenders