JOHANNESBURG - Investors looking at the bright side of the rand’s slump may like this.
The difference between the level of the currency, often viewed as a proxy for emerging-markets, and its 200-day moving average climbed to the highest level since January 2016. The last time the spread was this wide, it marked the start of three straight months of gains against the US dollar.
The rand, among the worst performers in developing nations this year, has risen everyday since the spread reached that milestone last week.
To be fair, the rand in early 2016 advanced along with its peers as a turn in sentiment toward risky assets spurred a rally that lasted more than two years. This time around, concerns about an escalating trade war, the gradual rollback of cheap money and idiosyncratic risks across emerging markets may mean that while some indicators are interesting, they’re not that crucial.
Societe Generale SA is shorting the rand against the greenback due to poor fundamentals and “the overhang of policy uncertainty from upcoming land reforms,” according to Singapore-based strategist Jason Daw.
The currency advanced 0.4 percent to 15.20 per dollar as of 4pm.