Rand remains firm but risk events loom
The rand was 1% firmer against major global currencies on Monday afternoon, amid some improvement in investor sentiment globally, but ahead of risk events this week.
Global risk assets were given a shot in the arm earlier, after the Chinese government announced a wide-ranging stimulus package. Concern that global growth is slowing has taken the edge off investor appetite in recent weeks.
Local markets are still expected to see cautious trading in the earlier part of the week, ahead of the medium-term budget policy statement (MTBPS) on Wednesday. Numerous local and international issues continue to hover in the background.
A gloomy statement from finance minister Tito Mboweni is likely to translate to rand weakness and losses on the JSE, said FXTM analyst Lukman Otunuga. Focusing on the technical outlook, the rand could strengthen to challenge R14.20 to the dollar in the near term, amid dollar weakness, he said.
The European Central Bank meets this week to discuss monetary policy. Political risks to the common currency continue, including fights over the Italian budget deficit and unresolved Brexit negotiations.
Locally, consumer inflation data on Wednesday, and producer inflation data on Thursday will give some indication of how much a weaker rand and higher fuel costs are pushing up prices.
At 3pm the rand was at R14.2818 to the dollar from R14.4488, at R16.3974 to the euro from R16.6421, and at R18.5181 from the pound to R18.8934. The euro was at $1.1481 from $1.1518.
Source: businesslive.co.za