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Rand climbs to 9-week high vs dollar

As optimism over recovering global growth boosts sentiment.
Image: Shutterstock

The rand firmed to its strongest in nearly nine weeks on Thursday, with market sentiment boosted by optimism over recovering global growth as economies reopen after coronavirus lockdowns.

Read: Green shoots emerge in world economy as virus lockdowns ease

The currency traded at R17.31 per dollar at 08:15, up nearly 0.4% from its previous close and its strongest since March 27.

By 11:37 it had weakened to R17.42, down 0.22%. The rand was down 0.31% at R21.38 to the pound, and down 0.18% at R19.17 to the euro.

The optimism over a global economic recovery trumped immediate concerns about a stand-off between the United States and China over Hong Kong.

Intraday rand vs US dollar movement

“Tension between the US and China is growing,” Bianca Botes, executive director at Peregrine Treasury Solutions, said in a client note. “In spite of this, the rand is holding rather firm … while seeking momentum to break another leg stronger in the short term.”

President Cyril Ramaphosa on Sunday announced a further easing of the country’s lockdown from June 1, allowing the vast majority of the economy to return to full capacity.

The government is due to provide further details on Thursday.

In fixed income, the yield on the instrument due in 2030 was down a single basis point at 8.975% in early trade.

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wow, the need for yield is real….

If R17.31/$ is a “high” then realise how far the R has fallen. Not so long ago we were drifting around R6/$.

There are hundreds of reasons why the price of any instrument moves in a particular direction. If there was any consensus about the driver of price-movement, there would not be any transactions because both the buyer and the seller would share the exact same conviction. The mere fact that the price moved, indicates that transactions took place. Transactions can only take place if buyers and sellers have complete contrasting views regarding the instrument they are trading in.

The financial press needs to sell subscriptions, therefore, they have to come up with reasons why the price moved. These reasons are very seldom valid, or at least, there is a myriad of reasons that could explain the move. The price moves simply because either the buyers or the sellers had a slightly stronger conviction about their preconceived ideas. The participants who had the opposite point of view were outmatched only by a small degree. The only correct and meaningful comment that explains rising prices is that the buyers were more active than the sellers. It is impossible to know the various factors that motivated each participant.

Agreed. It becomes tedious to listen to the global press and the herds they report to daily.

These herds demand that every single point movement in either direction, must be accompanied by a ‘news headline’ – so the narrative of that particular paper, then gets the journalist to pen something appropriate – each media outlet may have same or conflicting narratives which then lead to a different reason, there are always a hundred and one you could select at any given time.

All nonsensical when making comments on the blips up and down on a daily ticker, in what is just the course of normal trading.

Admittedly when the @ss drops out of a market, or the same market explodes upwards, there will be something news worthy as to why – then by all means. But otherwise you may as well comment on the reasons for the cloud formations floating by above us on any given day.

Maybe a better more insightful comment here, would have been considering the explosive move up in the markets and the DOW, over the last couple of sessions, in a clear risk on move, why has the ZAR not gained further significant ground … this could potentially point to informed sellers absorbing the buying whilst establishing contrarian positions, hence the relative non movement … maybe also a non-sensical comment but none more so than justifying a relative infinitesimal move up to global optimism.

This article is so stupid: the rand is tanking, just like every other currency. It’s all going to zero in the end. Hyping up some marginal gain in 9 weeks is like celebrating when a person falling with a failing parachute slows down a bit here and there… Point is he is still plummeting to his death, just like the rand is.

Too many market related and sentiment related, as well as totally unrelated reasons for currency movement. It takes a brave one, or a fool to predict R/$ exchange rate.
My own ‘feel’ is that the rand should stabilise at the R15.50/$ level.

End of comments.

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