Rand steadies after week of huge swings

The rand steadied on Friday morning, after another roller-coaster week for the local currency and broader markets.

TreasuryOne senior currency dealer Andre Botha said the rand was still recovering from the hangover of the medium-term budget policy statement, which had blindsided the markets.

The backlash played out in a much weaker rand and local bonds, though they have since stabilised somewhat. The upward revision in the projected government budget deficit and associated deterioration in the government debt-to-GDP ratio has revived concern that SA could be stripped of its investment-grade status.

Global markets continue to be jittery, casting a shadow over the recovery of the rand and local bonds, which tend to suffer more during bouts of global risk aversion.

“After speaking of the [budget] possibly ad nauseum this week, we turn our attention to other potential drivers of local financial markets,” Rand Merchant Bank analyst Nema Ramkhelawan-Bhana said.

“The rand, though impervious to the global equities volatility for much of the week, is now moving in lock-step with its compatriot emerging-market currencies, trading 1.4% weaker than Monday’s open.”

At 9.40am the rand was at R14.6058 to the dollar from R14.6271, at R16.6201 to the euro from R16.6367 and at R18.7205 to the pound from R18.7392. The euro was at $1.1379 from $1.1373

The yield on the benchmark R186 bond was 9.35%, from 9.37% at its last settlement.

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Source: businesslive.co.za