Rand holds firm amidst grim global outlook

The rand held on to its gains in early trade on Thursday amid grim forecasts for the global economy as both the US and Eurozone Central Banks kept a firm dovish stance, pushing the dollar near two-week lows.

At 0732 GMT the rand had strengthened by 0.32% to 13.87 to the dollar compared to its close in New York on Wednesday of 13.92.

“The rand finally broke below the R14.00 level on the back of international yield-seeking behaviour as both the US and Eurozone Central Banks kept a firm dovish stance,” Andre Botha, Senior Dealer at TreasuryONE said in a note.

The last time the rand had traded below the 14.00 threshold was on February 27.

The US dollar lacked momentum, with its index against six other currencies hovering near a two-week low, as the minutes from the Federal Reserve’s last meeting cemented its recent dovish policy stance with no change to rates expected this year.

While the European Central Bank left its ultra-easy stance unchanged as expected and the bank’s President Mario Draghi noted that economic data was weak.

“For now, at least, the sentiment is in the rand’s favour and we could see the rand breaking a little lower but gains could be a little bit harder to achieve,” Botha added.

Mining and manufacturing production figures due at 0930 GMT and 1100 GMT respectively, are the main data points to watch locally.

In fixed income, the yield on the benchmark government bond due in 2026 was down 1 basis points to 8.445% in early trade.

In the equities market, the Top-40 index weakened 0.67% to 51,811 points at 0751 GMT.