Rand could stabilise if no more nasty surprises

Cape Town – In a week of considerable currency volatility following Standard & Poor’s downgrade of South Africa's credit rating, the worst of the bad news is over and the rand could start stabilising, according to a currency analyst.

If the local unit can shake off recent turmoil, it could move lower to levels of about R13.70 to the dollar, TreasuryOne dealer Phillip Pearce said in a note.

“The environment remains very fluid though and the local unit vulnerable to headline news. Market sentiment will drive trade and I’d dare to say the rand could range between R13.65 and R13.90 if we have no nasty surprises,” Pearce added. 

Rand Merchant Bank analyst John Cairns said rand risks remain and because of this, further losses can't be ruled out. “But there are at least some signs of stability.”

READ: Banks lose R61b on Gordhan ouster, S&P downgrade 

Pressure could be easing and the rand may stabilise or even reverse its downward trend. “Most notably the rand/dollar exchange failed to reach a new high yesterday, despite the adverse political news,” Cairns said. 
 
The rand tumbled on Wednesday on the back of news that the ANC would not recall President Jacob Zuma, falling 2.8% to R13.86 from the intra-day high of R13.47/$. 

READ: Rand tumbles as Zuma stays put 

The announcement was made after an extended meeting of the ANC’s National Working Committee, after it became clear that the ANC would not pressure Zuma to resign.  

READ: Zuma survives and emerges stronger - economist

The decision by leaders within the ANC to back Zuma further strengthens his position and increases the probability that he will surve an opposition-sponsored vote of no confidence in Parliament, scheduled to take place on April 18.

At 10:00 on Thursday the rand was trading 0.23% higher at R13.85.