The rand was stronger against major global currencies on Monday afternoon, benefiting from positive international sentiment and ahead of mild risk events later in the week.
Markets have found support from a better than expected US nonfarm payrolls report on Friday, analysts said, seemingly brushing off lingering concerns of trade conflict.
This was despite the forthcoming Group of Seven (G-7) summit in Canada, where political tension and trade issues were on the agenda, making the summit more important than usual, reported Dow Jones Newswires.
Headlines from the summit would be watched, said TreasuryOne currency dealer Andrew Botha, with local focus on SA’s first-quarter GDP numbers on Tuesday.
The print could effect the rand negatively should it disappoint, but for the most part the rand would be tracking the US dollar, as it had for the past month, Botha said.
Economic consensus is for SA’s economy to have contracted in the first quarter of 2018, due to declines in the mining and manufacturing sectors. Bloomberg expects a quarter-on-quarter contraction of 0.8%.
Analysts said despite the many global risks and dollar strength, the rand continued to find support from developments in other countries. Turkey and Argentina, for example, were providing some additional appetite for the local unit due to SA’s relative stability.
Nedbank Corporate and Investment Banking analysts Mehul Daya and Walter de Wet, however, viewed the current relative strength in the rand as temporary, sticking to their year-end target of R13.10/$.
At 3pm, the rand was at R12.5563 to the dollar from R12.6647, R14.7105 to the euro from R14.7744 and R16.7984 to the pound from R16.9051. The euro was at $1.1715 from $1.166.
Local bonds followed the firmer rand, having been out of favour with foreign investors last week, when they sold off a net R3.3bn worth.
The benchmark R186 bond was bid at 8.555% from 8.61% and the R207 at 7.4% from 7.445%.