Rand stays on the front foot
JOHANNESBURG - The rand continued to strengthen on Monday, maintaining the strong momentum observed last week according to NKC Research.
Traders highlighted that the local unit has now dropped below the 200-week moving average, with February 2019 being the last time the rand dropped below the long-term average, as investors continue to seek out higher-yielding currencies.
This week’s inflation figures are expected to hold little surprise with price pressures remaining muted. Our analysis shows that most EM currencies benefit from higher commodities insofar as they are a reflection of a strong global industrial cycle – strong industrial growth typically means faster non-US growth and consequently a weaker dollar.
Commodities are structurally cheap relative to equities, which mirrors the structural cheapness of EM currencies relative to the greenback and indicates scope for significantly greater recovery in some EM currencies. That said, the biggest risk to EM lies in a sharp repricing higher in US real yields.
At the close of local trade, the rand quoted 0.67 percent stronger at R14.52$, after trading in range of R14.42/$ - R14.56/$. The rand extended gains overnight. Expected range today R14.35/$ - R14.60/$.
South African bourse
The JSE All Share (+3.18 percent) was broadly higher yesterday, thanks to gains in large technology (+4.00 percent) and resources (+4.23 percent) stocks. In the overall emerging market sphere, the MSCI Emerging Market Index traded flat at 1,439.2 pts.
Brent crude oil
The Brent oil price traded at levels last seen over a year ago due to fears of heightened tensions in the Middle East. At the close of local trade, benchmark Brent crude futures quoted 1.35 percent higher at $63.25pb. Crude prices traded stronger during Asian trade this morning.
BUSINESS REPORT ONLINE