Rand shines as Democrats victory weighs on dollar
File image: IOL
CAPE TOWN – The rand gained some impetus in afternoon trade on Wednesday after the dollar came under pressure as the Democrats won the House of Representatives for the first time in eight years.
The focus, according to analysts, now shifts towards the US interest rate announcement on Thursday, but a hawkish US Federal Reserve is expected.
Corporate treasury manager at Peregrine Treasury Solutions, Bianca Botes, told Business Report that the mid-term elections clearly indicated the US dissatisfaction with leadership under Donald Trump.
“This is, once again, an indication of how politics trumps economics in the current landscape. Policy uncertainty will now be top of the agenda for investors as the Democrats will move to challenge the Republicans on what they deem as numerous unconstitutional policies,” said Botes.
She said Eskom’s newly accepted board was also adding to the positive momentum of the rand which broke below R14 to trade at R13.95 in the afternoon session.
At 5pm the rand was bid at R13.98 to the greenback, which was 23c stronger than Tuesday’s 5pm bid. Against the pound the domestic currency was bid 19c firmer at R18.37 and to the euro the rand was 18 stronger at R16.04.
FXTM’s global head of currency strategy and market research, Jameel Ahmad, said the reality of the outcome from the mid-term election results had not created too much volatility for financial markets.
“Investors were reasonably well positioned for this outcome before the event, therefore it hasn’t been as much of a nervous few hours for investors as some political events have been in recent history.
“The USD has edged gradually lower against many of its counterparts over the course of this week, with this related to expectations that the Democrats winning some influence could provide some legislative resistance towards Trump further pushing forward pro-America policies,” said Ahmad.
BUSINESS REPORT ONLINE
Source: iol.co.za
