Rand claws back after rates, GDP thump | Fin24

Rand claws back after rates, GDP thump

Jul 20 2018 12:24

After weakening by more than 2% against the dollar on Thursday, the rand clawed back some losses in early trade on Friday.

At 10:59 the local currency was trading 0.44% firmer at R13.46 to the dollar, after opening at R13.53. 

It is still trading below Thursday morning's level of about R13.30/$.

Wichard Cilliers of TreasuryONE said in a morning note that the rand had started to weaken on Thursday in the run-up to the repo rate announcement by the SA Reserve Bank.

The central bank’s monetary policy committee decided to keep the repurchase rate unmoved at 6.5%, in line with the expectations of economists.

"[The weakness before the announcement] was not all that unsurprising with equity markets generally under pressure in Europe, while the dollar on a trade-weighted basis made decent gains through the session too.

"After two weeks of outperformance, the ZAR is on the bottom of the pile relative to the emerging market universe this week with losses in excess of 2% versus the dollar," he said. 

Earlier in the week the rand had traded as high as R13.13 to the greenback, and there was speculation that it could break the R13.00 barrier. 

"On a trade-weighted basis, it has lost around 1.5%. This is the second worst performance after the Russian rubble," said Cilliers. 

Adam Phillips of Umkhulu Consulting said the rand was not helped by SARB governor Lesetja Kganyago's remarks that inflationary pressures were on the increase, and SA's projected GDP growth rate had been downgraded from 1.7% to 1.2% for the remainder of 2018. 

NKC African Economics put the local unit's expected trading range at between R13.30/$ and R13.65/$.

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sarb  |  lesetja kganyago  |  markets  |  currencies  |  repo rate  |  rand


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