Photo: Karen Sandison/African News Agency (ANA)

CAPE TOWN – The Rand has started the week hovering around the R14 level as it prepared itself for the next round of events this week.

Dynamic Outcomes director and head market analyst, James Paynter said there were a few big fundamental events that could provide triggers with the prime one, of course, being the interest rate decision this week. 

“The SA Reserve Bank’s Monetary Policy Committee has a tough decision on their hands, needing to stimulate an economy that is in technical recession on the one hand, while needing to tame inflationary pressures as a result of a weaker rand and high oil prices on the other. Between a rock and a hard place really … with a rate hike being suggested, which cannot really be afforded at this time,” said Paynter

At 5pm on Monday the domestic currency was bid 2c weaker than Friday’s same time bid at R14.02 a dollar. Against the pound the rand was 3c softer at R17.99 and to the euro the currencey eased 4c to R16.03.

Peregrine Treasury Solutions corporate treasury manager Bianca Botes said as focus shifted towards the SA Reserve Bank and the MPC meeting with a potential interest rate hike of 25bp on the cards, it would be interesting to hear how SARB’s new Quarterly Projection Model – which now include factors such as political risks – would impact on the inflation outlook on Thursday.

Botes said the thawing US-China trade tensions as well as the political chaos in Brittain were both assisting the rand, which rallied more than 3 percent last week.

Senior Currency Dealer at TreasuryONE Andre Botha said this week all eyes would still be on the US dollar and the market would take their cues from any US dollar movement. 

“We do have the small matter of the South African MPC meeting this week, and the market is split over will there be an increase in the interest rate following the close call at the previous meeting and where the South African market is currently finding itself. With the decision being a close call we expect some volatility come Thursday,” said Botha.

JSE stocks edged higher with the blue-chip Top40 index gaining 0.74 percent to 46 188.84 points, while the broader all share index inched up 0.63 percent to 52 423.53 points.