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#SAMarketIndicators: Rand opened weaker against the greenback

Business Report

The South African rand opened weaker against the greenback in early trade this morning, as most emerging markets currencies retreated on the back of a political storm brewing in the United States.

The rand was trading 2.29 percent weaker against the dollar to R13.35 at 10am while the price of gold was down 1.56 percent to 1,257 in the same period. This means the gold price has increased by 2.5 percent since the start of the week. This is the 6th day that Gold has climbed.

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South African Rand coins are seen in this photo illustration

Alet Opperman, a director at Treasury One, said the crisis facing the Trump administration threatens to derail policy that has pushed equities to record highs.

“Volatility is high, so there’s a good chance the Rand will trade in a wide range today of 13.20 to 13.40. With the uncertainty surrounding Trump and new scandals popping up almost every day, it’s a safe bet to think Dollar weakness will continue. Unfortunately, Risk aversion will persist, and I think the Rand will trend higher with a bias to the R13.30’s,” says Opperman.

She adds that the Dollar weakness should be helping the Rand lower, but the acute risk aversion has investors running scared.

The JSE all share index was 0.13 percent stronger at 54.071 while the top 40 index was trading 0.21 higher at 47,606.  Mining stocks were trading 1.36 percent weaker while resources were down 0.19 percent and financial stocks were trading 0.10 percent weaker by mid morning. 

Analysts from Momentum SP Reid say the dollar continues to trade largely in line with their technical evidence which had argued for additional weakness.

“This adjustment reduces the impetus of recent improvements in the Rand but, for the moment, the overall tonality (taken over a few sessions) remains supportive,” says Momentum.

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