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Rand hits 11-week high

Stocks gain.
Image: Bloomberg

The rand raced to an 11-week high against the US dollar Friday, supported by a risk rally as an unexpected fall in the US unemployment rate brought back hopes of a swift economic recovery.

Stocks rose along with global markets as investors priced in an economic recovery following the shock of the coronavirus pandemic.

At 1505 GMT the rand was trading at 16.86 per dollar, 0.3% firmer than its previous close, after hitting 16.73 earlier in the session — its strongest since March 18.

The US economy unexpectedly added jobs in May after suffering record losses in the prior month, offering the clearest signal yet that the downturn was probably over, though the road to recovery could be long.

The risk rally was also supported by new monetary stimulus for Europe.

“The sheer size of the monetary and fiscal support measures out of the developed world in light of the coronavirus shock has driven a risk-on frenzy as a global search for yield has led to financial spillovers into the emerging market space,” said economists at ETM Analytics.

“Technically, the 16.85 handle remains the line in the sand for the USD-ZAR, with the pair hovering around this level all morning. A sustained break below this level is likely to see a slide to 16.65,” ETM analysts said in a note.

The Johannesburg All-Share index rose 2.85% to 54,722 points, while the blue-Chip Top-40 Index gained 2.79% to 50 200 points.

Banking shares were among the gainers up 6.57% with Nedbank 9.18% higher to R126.10 and Standard bank 6.22% stronger to R119.73. “Financials and properties are holding up the market. The international markets are supporting our market from a directional perspective,” said Nilan Morar head of trading at the Global Trader.

Bonds weakened, with the yield on the 10-year government issue adding 20.5 basis points to 8.945%.

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Thank God nobody is manipulating anything, its the free market doing its thing.

Hard to see what can give the Rand any long term strength with all the bad news in the country. I suspect it will see 25:1$ before it sees 15:1$

Its actually the Dollar that hit an 11 week low due to all the free money being dished out in the US.

Give it time.

The planned devastation caused by the lockdown and the RET that the government will now start employ ensure that the rand will soon start to compete with the Zim dollar.

Rand strength just can’t last for long

End of comments.

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