Rand stable at R13.53/$ as markets digest Donald Trump’s comments

The rand treaded water against major global currencies on Friday morning, stable after what was a volatile session on Thursday.

In the absence of major local and international data releases, no new catalysts are on the horizon as the weekend approaches.

The local unit was on the receiving end of hawkish Reserve Bank commentary, bullish testimony by US Federal Reserve chairman Jerome Powell and comments by US President Donald Trump that interest rates were rising too quickly in that country.

Trump’s comment gave pause to the recent dollar rally, with the rand volatile. The local currency was expected to be somewhat inert, despite the Bank commentary, Rand Merchant Bank analyst Nema Ramkhelawan-Bhana said.

“We did not account for the emerging-market contagion effect, which dragged the rand 2.4% weaker against the greenback as investors offloaded a variety of emerging-market stocks and bonds,” she said.

The rand has been volatile of late, having strengthened about 70c since reaching R13.99/$ at the end of June.

“My personal view is that the dollar is about to start another leg of strength, regardless of what Trump says, and that last night’s dip has just provided an opportunity to buy the dollar again,” Standard Bank currency trader Warrick Butler said. The 70c correction in the rand was likely to be over, and a longer-term break of 14/$ was probable, Butler said.

At 9.20am the rand was at R13.5437 to the dollar from R13.5388, R15.7672 to the euro from R15.7643, and at R17.6126 to the pound from R17.6212. The euro was at $1.1641 from $1.1643.

Local bonds were weaker, with the benchmark R186 bid at 8.76% from 8.725%, while the R207 was at 7.47% from 7.435%.