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Cape Town – The rand continued its “puzzling” decline against the dollar, trading 0.24% lower at R13.90 by 08:30 on Friday.
“Some rand weakness is justified given the (Deutsche Bank-inspired) global-risk-off environment, but the extent of losses remains puzzling considering ABI (AB InBev) inflows should be continuing,” RMB analyst John Cairns said on Friday, adding that “losses remain difficult to explain”.
Umkhulu Consulting analyst Adam Phillips concurred, saying “this week has been very confusing”.
“It now transpires that there was a great deal of 'front running' by offshore players on the inflows from AB Bev,” he said on Friday.
Cairns said that “taking a strong rand view is very difficult when one does not fully understand what is going on”.
“Still, given the underlying size of the ABI (AB InBev) flows, we are reluctant to give up on our call for rand gains to resume,” he said.
“Clearly, however, two days of aggressive rand losses imply there is scope for further USD/ZAR upside. As such, for now, the view is for sharp moves in either direction.”
