Rand strengthens to levels last seen in mid-March
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DURBAN – The rand continued to firm on Wednesday to reach levels last seen in March with all eyes are on the US Federal Reserve as markets anticipate a bleak economic outlook and dovish stance from the US central bank.
The rand reached a fresh high of R16.55 to the following the opening of the US market.
Bianca Botes, executive director at Peregrine Treasury Solutions said in a note that the dollar remained under pressure as markets were divided on whether the Fed would take action against the rising treasury yields, while also zooming in on the first economic projections by the US central bank following the outbreak of the pandemic.
“The outcome of today’s Federal Reserve meeting will set the tone for dollar performance, and the course for currency markets as a whole. The rand remains resilient in light of the subdued dollar, with a sustained break below R16.65 opening the door to R16.50," she said.
At 5pm the rand was bid 6c stronger than the same time bid on Tuesday at R16.58 against the dollar. Against the pound, it was 7c stronger at R21.11 and bid at R18.82 versus the euro.
Senior research analyst at FXTM Lukman Otunuga said the rand struggled for direction on Wednesday morning ahead of the Fed’s monetary policy announcement. “Looking at the technical picture, the USDZAR is trending lower on the daily charts. A solid breakdown below R16.50 may open the doors towards R16.20.” said Otunuga.
Meanwhile, JSE stocks ended in the red with the blue-chip Top40 index declining 1.42 percent to 49,204.82 points while the broader all share index also shed 1.49 percent to 53,672.63 points.
The biggest earners were MultiChoice Group which gained 8.31 percent at R102.46 followed by Altron with 6.43 percent at R24.48 then PSG Konsult with 3.81 percent to R7.90. British American Tobacco increased by 3.30 percent at R659.06 while Kumba Iron Ore lifted 3.11 percent to R508.18.
The biggest losers were Sasol which shed 18.58 percent to R139.60 followed by Northam dropping 10.54 percent to R105.41 while Implats decreased by 10.52 percent to R120. Hammerson lost 7.19 percent at R24.64 and RCL Foods lost 6.74 percent to R8.86.