JOHANNESBURG – South Africa’s rand rose to its strongest since July 2015 yesterday as it crossed crucial technical points and ignited offshore buying interest. At 1508 GMT, the rand was up 0,28 percent to 12,260 against the dollar. Earlier in the session, the rand reached 12,1950 per dollar, a new two-and-a-half year best, driven by what traders said was a conducive global environment and low liquidity that pushed the currency past the long-time target of 12,2300.
“Once the rand went through the key support level at 12,23, it is likely that a lot of stop-losses were triggered,” said senior trader at Standard Bank Oliver Alwar, adding that low levels of liquidity may have also extended the move.
When trading began, investors were wary of a return of dollar strength after losses for most of the month, as markets price in the risk of policy tightening in other developed nations. In particular, speculation is growing the European Central Bank will start to slow its asset buying this year.
Even so, the rand has remained a key carry-trade target, more so with the local central bank not expected to cut lending rates at its policy meeting on Thursday. — Reuters.