At 5pm, the rand bid at R13.8460 to the dollar, 6 cents firmer than at the same time on Friday. Most of those gains came in the latter part of the session, with offshore investors in particular lured by the rand’s healthy carry return.
The European Central Bank is expected to lower its key deposit rate on Thursday while the US Federal Reserve is expected to cut rates on July31, prompting investors to look to high-yielding emerging markets assets.
The SA Reserve Bank cut its own key rate last Thursday, but looks unlikely to ease further this year, and with inflation trending lower, the rand and local bonds have continued to draw buyers.
“Consumer prices, like the SARB said last week, will remain subdued so the rand remains an attractive carry trade,” said trader at IG Markets, Shaun Murison.