JOHANNESBURG - THE RAND began the week on the back foot as the dollar strengthened in anticipation of US President Joe Biden’s proposal for federal investments in infrastructure and healthcare.
The rand traded to an almost two-week low of R15.06 to the greenback before ending the day 0.09 percent stronger to R14.97 by 5pm as investors turned to the US dollar due to an improving American economic outlook.
The demand for riskier currencies was under pressure amid worries about rising Covid-19 cases, and new variants across the globe.
FXTM’s Lukman Otunuga said the dollar had entered the week on a firm note, appreciating against every single G10 currency excluding the Japanese yen.
“Enthusiasm over the US economic recovery and rising Treasury yields have pushed investors towards the dollar’s safe embrace, while progress on the vaccine front has sweetened appetite for the currency,” Otunuga said.
Tomorrow, Biden will lay out the first part of his multitrillion-dollar economic recovery package, focusing on rebuilding roads, bridges and other infrastructure while creating millions of jobs.
In April, Biden will present a separate plan addressing child and healthcare.
Investec chief economist Annabel Bishop said emerging market currencies lost some shine yesterday against the US dollar as the greenback strengthened.
Bishop said this was because of Covid-19 cases rising around the world while US Treasury yields remain elevated as inflation is expected to rise, benefiting the reflation trade.
Meanwhile, the markets were a bit cautious ahead of the holiday-shortened week.
However, the stock market traded at a twoweek high as the South African Reserve Bank left lending rates unchanged last week.
The JSE All Share Index traded above the 67 100 point-mark, its highest level since March 16. The benchmark index ended the day 0.38 percent to 67 089 points while the Top40 Index rose 0.33 percent to index 61 443.90 points on gold and bank stocks gains.
AngloGold Ashanti rose 5.56 percent to R320.54 per share, while Investec and Absa gained 4.57 percent and 4.53 percent to R168.73 and R128.45 per share, respectively.
BUSINESS REPORT