Rand stays close to R14/$, despite euro’s Italian troubles

The rand was slightly firmer against major global currencies on Friday morning, only about 10c away from the psychologically important R14 to the dollar level.

The local currency has found buyers this week, with analysts noting that negative sentiment towards emerging markets appeared to be easing slightly.

However, the euro, which the rand usually tracks, has been under some pressure after Italy’s anti-establishment government widened its budget-deficit target for 2019. This could prompt conflict with the EU and has put investors on edge, analysts said.

Sentiment towards emerging-markets was assisted on Thursday by, among other factors, interest-rate increases in Indonesia and the Philippines, and a statement from the Turkish President Recep Tayyip Erdogan that he was “hopeful” of better ties with the US, said Rand Merchant Bank analyst Kim Silberman.

Risk assets have found some favour after the US Federal Reserve met expectations at its monetary policy meeting on Wednesday. President Cyril Ramaphosa’s reassurances to investors on issues of policy, including land expropriation, also appear to have provided some support.

“With the rand enjoying the recent run we expect that a combination of position squaring and a slightly stronger dollar could see the rand drifting a little higher as we close off the month,” said TreasuryOne senior currency dealer Andre Botha.

At 9.15am the rand was at R14.1207 to the dollar from R14.1266, at R16.4146 to the euro from R16.4431 and at R18.4575 to the pound from R18.4787. The euro was at $1.1624 from $1.1641.

At the same time the benchmark R186 government bond was bid at 9% from 8.98%, while the R207 was unchanged at 7.57%.