JOHANNESBURG. — The rand was relatively well anchored yesterday morning, hitting 13,20 to the dollar for the first time in three weeks and marking a sharp U-turn from last week when it flirted with 14 to the dollar. The local currency benefited from a weaker dollar, which has been under pressure relative to most currencies, including the euro and the British pound.
The uncertainty about the pace of interest-rate increases in the US continues to weigh on the dollar index, which has slipped below the psychological level of 100 points. A stronger rand helps to rein in inflation, which eased to an annual rate of 6,1 percent in March from 6,3 percent in February, according to latest Statistics SA data.
“We still foresee the downward trend in consumer inflation despite the rand exchange rate’s notable depreciation following the late-night Cabinet reshuffle and subsequent sovereign credit ratings downgrades,” NKC Research analysts said.
Just more than three weeks ago, President Jacob Zuma fired Pravin Gordhan as finance minister in a controversial Cabinet reshuffle that sent the rand to 13,95 to the dollar, raising inflation concerns.
“Is the rand stabilising, or is the big hit still coming? The rand firmed as new Finance Minister Malusi Gigaba tried to calm market fears by pledging to work on forestalling a third credit downgrade,” Old Mutual Investment Group chief economist Rian le Roux said.
“The rise in the gold price also contributed to a firmer rand. However, the danger is losing investment grade on local bonds from S&P and Moody’s, which could trigger big outflows.”
At 9.06am the rand was at 13,2011 to the dollar from 13,2738. The rand was at 14,1810 against the euro from 14,2191 and at 16,9423 against the pound from 16,9645. The euro was at $1,0742 from $1,0732. — BDLive.