File image: IOL
File image: IOL

Rand holds steady as risk-on sentiment kicks in

By Given Majola Time of article published May 19, 2020

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DURBAN – The rand held steady as the domestic currency firmed as it ranged between R18.35 to R18.61 to the dollar on Tuesday.

Executive director at Peregrine Treasury Solutions Bianca Botes said that risk-on sentiment sees rand at the upper end of the trading range. “Growing optimism around a Covid-19 vaccine that is showing promising results helped to restore some positive market sentiment, while the Federal Reserve’s unwavering support for the US economy was also perceived as risk-on by the market.

Botes said that the rand continues to be driven by sentiment, which was essentially a balancing act as it switched between risk-on and risk-off as the pandemic unfolded. 

At 5pm the rand was bid 13c stronger than the same time bid on Friday at R18.27 against the dollar. Against the pound, it was 7c stronger at R22.39and bid at R19.97 against the euro. 

Nedbank CIB Research Analyst Reezwana Sumad said the rand has held steady as global appetite for risk has improved marginally. “Stock markets encountered support as optimism regarding a promising vaccine for COVID-19 grew, but despite data releases, this is unlikely to have any effect on the markets,” said Sumad. 

She added that the international markets also continued to trade within fairly limited ranges, although the EUR traded moderately firmer than the USD.  

Investec’s Annabel Bishop said that interest rates are likely to remain lower for longer in South Africa, at this week’s MPC meeting a small rate cut is likely. “South Africa has seen a 2.25bp cut in interest rates this year, 200bp in direct response to the impact Covid-19 has had on the economy and financial markets, as the crisis deepened. The first cut, of 25bp in January, was in response to the recession SA had fallen into in the second half of last year, given that inflation was subdued into the target range close to the midpoint, and expected to remain there over the forecast period,”  said Bishop. 

Meanwhile, JSE stocks rose with the blue-chip Top40 index lifting  1.02 percent to 48,160.65 points while the broader all share index also increased 1.11 percent to 51,950.14 points.

The biggest earners were Hammerson which gained 11.88 percent at R14.32 followed by MTN with 10.31 percent at R56.80 then Redefine with 10.05 percent to R2.30. Netcare increased by 8.57 percent at R14.95 while Transcap lifted 8.45  percent to R16.55.

The biggest losers were TFG which shed  4.81 percent to R64.25 followed by AB Inbev dropping 3.97 percent to R752.17 while Pepkor decreased by  3.16 percent to R10.12. Sasol lost 2.94  percent at R82.86 and Harmony losing 2.52  percent to R68.72.

BUSINESS REPORT

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