Rand kicks off new month on stronger footing

The rand was almost 1% stronger against the dollar on Thursday morning, beginning a new month on a positive note.

Investors continued to pile back into the risky assets, helping the rand, which usually benefits from risk-on trade.

The local currency had a rocky patch in October, as did the local bonds, reflecting increased market worries about the health of the country’s finances.

The jitters followed the weaker-than-expected fiscal outlook, which kept alive the possibility that SA could lose its last remaining investment-grade status.

A strong dollar remains a recurring theme, although it eased off a little in early trade, helping to take pressure off the rand and other currencies.

US economic data continues to impress, feeding the expectation that the US Federal Reserve will continue to raise interest rates, which tend to dilute the appeal of emerging markets such as SA.

US private-sector jobs report for October was much better than expected, signalling that the US nonfarm payrolls report, due out on Friday, could similarly be positive.

At 10am, the rand was at R14.6672 to the dollar from R14.7760, at R16.6619 to the euro from R16.7179, and at R18.8933 to the pound from R18.8721. The euro was at $1.1360 from $1.1311.

The yield on the benchmark R186 bond was at 9.34%, from 9.36% at it last settlement.

“Foreign selling was prominent as the outlook for our [bond] market looks slightly grimmer approaching year-end,” Rand Merchant Bank analyst Gordon Kerr said in an e-mailed note to clients.

“Importantly, locals have not been active post the budget and a lack of sellers in this section of the market has certainly been a help for bonds.”

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Source: businesslive.co.za