The rand was reasonably stronger on Monday morning, building on last week’s momentum that saw the currency recover almost 2% against the dollar, thus helping to reduce the probability of another fuel hike.
A weaker rand and higher international prices over the past few months have helped push petrol to record highs, prompting the government’s announcement last week that it was looking into ways to help relieve pressure on consumers.
SA is a net importer of fuel, which makes it susceptible to the vagaries of the oil market — a situation not made easier by the volatility in the rand-dollar exchange rate.
Consumers are feeling the pinch through higher fuel prices, as well as other levies such as increased value-added tax (VAT).
But the rand fared a lot better compared with two weeks ago when it flirted with the symbolic R14/$ level, last seen in late November. The relative rand strength came amid stability in global markets, which encouraged investors to buy risky assets, notably shares and bonds.
Foreigners were net buyers of local bonds to the value of R504.9m over the past week, helping to nudge local bond yields lower, as fears of a global trade war subsided.
The dollar was also under pressure, to the benefit of emerging-market currencies, after a mixed US nonfarm payrolls report on Friday.
While the US economy created more jobs than expected in June, wage growth remained tame, implying that inflationary pressures were relatively low.
The upshot is that the US Federal Reserve is likely to stick to its gradualist approach in raising rates.
The pound weakened in early trade against the dollar before turning positive as markets weighed the effect of the resignation of a high-profile UK politician involved in the Brexit process.
The uncertainty on Brexit has previously hit global markets.
At 10.33am, the rand was at R13.4278 to the dollar from R13.4648. It was at R15.8065 to the euro from R15.8110, and R17.9275 to the pound from R17.9518 The euro was at $1.1771 from $1.1742.