Rand firms to R14.36 to embattled dollar, despite risk-off global trade
The rand brushed off turmoil on global stock markets and was firmer against major international currencies on Monday afternoon, boosted by pressure on the dollar.
The dollar was under strain seemingly from concern that slowing economic growth could derail the US Federal Reserve’s planned interest rate increase cycle, BK Asset Management MD Boris Schlossberg said.
Investors could also be seeking to lock in gains after a strong showing by dollar-denominated assets, such as stocks, while there was also some concern about rising US twin deficits (budget deficits and trade deficits).
Local factors were taking a back seat to international events, analysts said, with ratings agency Moody’s opting not to assess SA’s sovereign credit ratings.
Moody’s is now likely to wait for the medium-term budget statement, said Rand Merchant Bank analyst Mpho Tsebe and Elena Ilkova. The forward looking budget, however, was unlikely to be sufficient to prompt an immediate review.
A number of issues continue to lurk in the backdrop this week, including possible tension between the European Central Bank and Italy, whose government wants to raise its budget deficit target.
EU officials are set to receive an update on Brexit negotiations on Wednesday, while US Federal Reserve minutes from that bank’s latest meeting are due on the same day.
At 3pm on Monday the rand was at R14.3586 to the dollar from R14.4998, at R16.663 to the euro from R16.7591, and at R18.8984 to the pound from R19.002. The euro was at $1.1605 from $1.1541.
Source: businesslive.co.za
