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CAPE TOWN – The rand opened largely directionless remaining range-bound for the better part of the day as the market prepares for Finance Minister Tito Mboweni’s maiden Medium-term Budget Policy Statement on Wednesday.

The domestic currency rand firmed in afternoon trade as emerging markets got a boost from hopes of more economic stimulus from China.

TreasuryONE senior currency dealer Andre Botha said there had been some positive news out of China where the authorities have stepped in to calm the highly stressed Chinese markets. “The flip side of the coin is that this could only be a temporary hold as the scope of the Chinese intervention has been questioned as the feeling is that they are overextended at the moment.”

At 5pm on Monday the rand was bid 14c stronger than Friday’s same time bid at R14.28 a dollar. Against the pound sterling the rand was 33c firmer at R18.52 and to the euro the currency strengthened 24c to R16.38.

Traded sideways

Corporate treasury manager at Peregrine Treasury Solutions, Paul Muller said the rand traded sideways on Friday, struggling to convincingly break the R14.40 a dollar level. 

“Emerging market equity prices continued to slide and ended the week down sharply. The currency market will be anxiously watching the Medium Term Budget Policy Statement on Wednesday. This could have an important effect on the rand,” said Muller.

Emerging markets have underperformed dramatically in 2018, weighed down by rising US interest rates, escalating trade wars and turmoil in countries such as Turkey and Argentina, according to PSG Asset Management. This backdrop has seen the rand depreciate significantly and the FTSE/JSE All Share Index fall by 3.8 percent as at the end of September.

On Monday the JSE stocks closed on a positive note with the blue-chip Top40 index gaining 0.3 percent to 46 034.49 points, while the broader all share index inched up 0.21 percent to 52 204.16 points.