DURBAN – The rand opened the week running stronger ahead of the expected Federal Open Market Committee (FOMC) 25bp cut this week with progress in US-Sino trade talks also being key as both mitigated some of the risks of a further marked slowing in the synchronised global economic downturn.
Investec group economist Annabel Bishop said the rand’s recent run of strength to R14.58 a dollar, R16.24 versus the euro and R18.80 to the pound in the past week, from its close the previous week, was chiefly supported by progress in trade negotiations between the US and China, with a partial trade deal having been achieved.
“The domestic currency has settled around R14.60 a dollar so far … but still contains a material risk premium on investor concerns over Eskom, and the projections of further deterioration in public finances expected in the Medium-term Budget Policy Statement (MTBPS), which will occur this week on Wednesday,” said Bishop.
At 5pm the domestic currency was bid 8c stronger than the same time bid on Friday at R14.64 against the dollar. Against the pound, it was 5c stronger at R18.73 and bid at R16.15 to the euro. The unit traded between the range of R14.53 - R14.64 on Monday.
Treasury Partner at Peregrine Treasury Solutions Bianca Botes also said that the Rand held on to gains as global tensions eased.