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Rand surges to almost R13.50 to US dollar

On the back of improved economic growth forecasts for South Africa due largely to the boom in commodities.
Image: Dean Hutton/Bloomberg

The rand surged in overnight trade against the US dollar on Wednesday reaching R13.52 at one stage (after midnight) and is set to test the psychological R13.50 level.

Rand/dollar exchange rate over 1 year

It is at a new multi-year high against the greenback, with the rally fuelled by better-than-expected economic forecasts out of the South African Reserve Bank and other financial institutions in recent weeks.

The boom in commodity prices is playing a starring role.

Despite worsening unemployment figures released on Wednesday, the fact that the job losses came in slightly lower than forecasts, also seemed to buoy the rand.

The currency surged over 1.6% after midnight (to R13.52) and by 08h00 on Thursday was trading at around R13.55 to the dollar.

In a morning note on Thursday, currency strategist at TreasuryONE Andre Cilliers said that positive risk sentiment was also a factor, which kept the dollar on the back foot and saw US bond yields decline.

“The rand continues to outperform its emerging market peers as commodity prices remain elevated and good resource-based exporter dollars flood the local market,” he pointed out.

Cilliers said a sustained break of the R13.50 level could see the rand target R13.35 in the short term.

Read: Counterpoint: The rand could overshoot and strengthen to 11 to the US dollar

The JSE All-Share Index also closed above the 69 000 level for the first time ever yesterday at 69 049.

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COMMENTS   8

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OR printing all those Dollars is making the U.S. Dollar worthless?????????
Remember the Z$ 100,000,000,000,000 note??

Yes, “the dollar drops” is not PC

Half correct article. ALL due to commodity price boom …not due to prospects in this place other than from the commodity boom. Unemployment, broke SOEs, Eskom collapsing and ANC stealing is destroying the place.

Just to note a currency cannot target a level. Nor can anybody predict the direction of any freely traded currency over any period better than a coin flip. That is just hocus pocus trying to sound credible. Technical analysis also has no credibility in this regard. “Technical analysis derives from humans’ preference for looking at pictures instead of engaging in abstract mental processes.” I could not have said this any better. The stuff about resources you better believe. SA commodity exports are exploding on volume and price and that has a fundamental impact on the rand through supply and demand.

Technical analysis might just be a little to “technical” for some and fundamentals are a little confusing too and often misunderstood..

Hang in there we will all get it wrong some of the time.

This is brilliant and great news for all South Africans.

Really? It has nothing to do with how well the country or our economy is doing. Its all due to demand for commodities from overseas. That means it could change at any moment. If there is another Covid outbreak, the rand will tank to previous levels and there is nothing we can do about it.

Its good news, but its only lipstick on a pig. Government has turned our country into a well dressed little piglet.

End of comments.

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