Rand hovers at multimonth low as dollar remains resurgent

The rand continued to hover at a five-month low against the dollar on Monday afternoon, in range-bound trade, as investors eye risk events this week.

News at the weekend that the US trade conflict with China “was on hold”, has put even more buoyancy in the greenback, keeping emerging-markets under pressure.

At 3pm, the rand was at R12.8195 to the dollar from R12.7755, at R15.0844 to the euro from R15.0363 and R17.2106 to the pound from R17.2044

The euro was at $1.1768, from $1.1773.

Expectations that the US Federal Reserve may start normalising monetary policy at a faster pace than that of the European Central Bank, has recently bolstered the greenback.

Analysts said in the absence of major news, dollar strength looked set to continue, and overshadow local factors.

“The dollar is grossly overbought and due for at least a mild profit taking correction, but for now, the bears have no viable catalyst to spur a counter-trend move,” said BK Asset Management MD Boris Schlossberg.

Range-bound trade in currency markets, however, is expected early this week, amid bank holidays in Europe, and ahead of key events and data releases later.

Domestically, the South African Reserve Bank is widely expected to keep interest rates on hold when its monetary policy committee ends its scheduled meeting on Thursday, but markets will scrutinise its commentary in order to gauge its policy outlook. Ahead of this, inflation data for April is due on Wednesday.

The Bank was likely to opt to keep interest rates on hold, with recent geopolitical tension likely to ensure a cautious stance from the monetary policy committee in

the near term, said Nedbank Corporate and Investment Banking analysts.

Source: businesslive.co.za