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The rand, which strengthened to its best level in seven weeks, is expected to break below the R14/$ mark during Friday’s session, according to analysts.
The currency which opened at R14.12/$ on Friday morning, had made gains during the previous session as other emerging market currencies such as the Turkish lira and Korean won made slow recoveries on Thursday, according to analysts from NKC Economics.
NKC expects the rand to trade within a range of R13.95/$ and R14.25/$.
Andre Botha, Senior Dealer at TreasuryONE also attributes the rand’s gains to a less risk averse sentiment towards emerging market (EM) currencies by investors. “It seems that the EM tantrum has dissipated somewhat as investors have seen some value in EM again,” he said.
The rand has also been buoyed by the recent dollar weakness, which is still a key determinant of the rand’s direction, he explained.
The currency could be impacted by local data scheduled to be released on Friday, which includes the trade balance figure for August. “Should the number surprise to the negative side we could see some rand weakness. However, with the market looking at new catalysts we expect today to be range-bound with a bias to a little weakness,” Botha said.
In an update RMB economist Kim Silberman said that the US consumer spending and inflation data, also expected to be released on Friday, will set the tone for markets.
Bianca Botes, corporate treasury manager at Peregrine Treasury Solutions, noted that the currency had managed to shrug off the rising oil price, trade wars and rising foreign interest rates this past week, having gained nearly 2%. “While the rand performance is baffling to say the least, let's enjoy the small victory,” she said.
By 09:45 the rand was trading at R14.13./$.
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