Rand powers to new five-month high

Investors globally look to take on risk.
The rand has gained about 5% since mid-December. Image: Waldo Swiegers, Bloomberg

South Africa’s rand rose to a new five-month high on Friday as investors globally looked to take on risk, targetting emerging markets for their higher yields.

At 1515 GMT, the rand was 0.69% firmer at 14.04 per dollar, pulling back slightly after breaching 14.00 for the first time since July earlier in the session.

The rand has gained about 5% since mid December, despite a raft of data releases showing a weak economy and nationwide blackouts by state power firm Eskom, with investors willing to overlook the negatives and pocket the high yield.

A global backdrop of low-to-zero central bank rates in developed markets, paired with the spectre of recession as the United States and China continue to tussle over tariffs, has prompted investors to hunt for yield.

Analysts see a further pick up in risk appetite in early 2020, especially with the US central bank set to keep lending rates flat or lower them further.

In local data, South Africa’s trade surplus widened to R6.1 billion in November from R2.75 billion surplus in October.

Bonds were firmer, with the yield on the benchmark government paper due in 2026 down 6 basis points to 8.165%.

Stocks ended higher, with the JSE Top-40 Index up 0.24% at 51,147 points, while the All-Share Index rose 0.41% to 57,480 points.

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Absolutely loving this strong rand. Yet another opportunity to move funds offshore. Use it or lose peeps!!! We will still think back wistfully to these currency levels once Eskom finally kicks the bucket, the ruling party moves far right to stem vote losses and legalizes populist policies such as NHS, EWC, prescribed assets, supertaxes and levies on mines, etc….and don’t forget the approximate 60% unemployed and unemployable youth between 15 – 35 (loaded with testosterone and no outlet) etc. Use all periods of rand strength to move funds offshore….

@HS yes it is an opportunity to diversify. Where do you invest to get a return over the next 5 years?

Good question; where are the returns going to come from other than a weakening of the ZAR.

Unless one is very fortunate most likely offshore equities are going to plummet in $, GBP and Euros due to current over-pricing. Some commentators forecasting up to 60% drop. Gulp.

Hard to know what to do at this stage but blindly going offshore now with bulk money seems very risky.

One bright spark has suggested maxing out one’s access bond just to put the money offshore in case of EWC?? Panic.

Looking forward to responses to this query.

Difficult to stop the Rand with the PGM(s) at these levels.

The Rand is set for 13 ZAR to the USD in the next few months.

End of comments.

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