Rand firmer on Friday, but headed for weekly loss

The rand was on track to break a four-week winning streak against the dollar on Friday, having been buffeted this week by rising Middle East tension and signs of hawkishness from the US Federal Reserve.

On Friday morning the rand had lost 1.28% against the dollar so far during the week. It has, however, still gained 2.94% against the greenback over the past 30 days, making it the fourth-best performing emerging-market currency tracked by Bloomberg.

Markets have had a mixed reaction to the Fed policy statement on Wednesday, with the expectation of further rate cuts in 2019 being tempered amid rising borrowing costs in the US, which the world’s most influential central bank played down.

Short-term borrowing costs have risen in the US a result of a coincidence of unrelated factors such as treasury auction settlements, tax payments and a broad-based sovereign bond sell-off that happened a week earlier, said London Capital Group senior market analyst Ipek Ozkardeskaya in a note. This obliged primary dealers to buy a huge amount of assets from investors.

“As it appears, the Fed’s muted reaction to the tightened short-term liquidity trimmed the dovish expectations for the coming meetings,” Ozkardeskaya said.

At 8am the rand had firmed 0.4% to $14.759/$, 0.24% to R16.3197/€ while remaining flat at R18.5419/£. The euro was 0.14% firmer at $1.1056.

The pound was finding some support after European commission president Jean-Claude Juncker said on Thursday he was confident a Brexit deal will get passed before the October 31 deadline.

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Source: businesslive.co.za