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Cape Town – The rand reached R14.08/$ at one point on Friday after the Bank of Japan announced more monetary policy stimulus plans.
READ: BOJ opts for limited stimulus expansion, plans to assess policy
“If there was a sign that nothing local matters for the rand but global central banks, this was it,” said RMB analyst Isaah Mhlanga on Friday.
The Bank of Japan expanded its purchases of exchange-traded funds and doubled the size of a US dollar lending programme, while refraining from boosting the pace of government-bond purchases that have formed the main part of its monetary stimulus, Bloomberg explained.
“The push stronger of the rand is in line with what happened with other emerging currencies overnight, as the surge for yield continues,” said Wichard Cilliers, head of dealing and director at TreasuryOne.
By 10:00, the rand was trading at R14.15/$ and Cilliers estimated it would trade between R14.05 and R14.25 on Friday.
Umkhulu Consulting’s Adam Phillips said while the rand traded down to R14.08, “it is unconvincing and it all depends if importers have any further buying to do before month end”.
South Africa’s trade balance will be released on Friday with a number of R7.2bn being spoken of, said Phillips. “Before that, private sector credit and money supply will come out,” he said.
“The reasons for buying the rand on its own merit are just not there at these levels, but as I mentioned the other day the yield players might just manage to keep the momentum they have built up and push it through R14.00/$.”
However, Mhlanga and Cilliers said there is high event risk from a data perspective on Friday.
“The market will turn to US employment cost index and 2Q16 GDP which is expected to print at 2.5% q/q from 1.1% previously. Personal consumption is also expected to accelerate to 4.4% from 1.5%. In the Eurozone, GDP is expected to moderate to 0.3% in 2Q16 from 0.6% previously.”
