Despite recent tensions, it seems that concerns surrounding the ‘global trade war’ are abating, with both US president Donald Trump and China softening their respective stances overnight.
TreasuryOne analyst Andre Botha, said that, as a result, there has been a collective sigh of relief across markets, which means that ordinary risky assets like the stock markets ended up well in the green at opening on Tuesday (27 March).
“This bodes well for the rand and other risky assets going forward, and we might see a renewed push lower for the rand,” he said.
“Looking at the political landscape and economic sentiment we feel that the rand is in a great position to gain some ground. Barring some unforeseen event, we could see the rand breaking below the R11.50 level and maybe trying to test as low as R11.20.
“The scene is set perfectly for some rand gains, with the political mood and overall sentiment in South Africa buoyant and events across the oceans looking a lot rosier,” he said.
Despite the positivity, Botha said that the rand is still expected to trade in tight ranges, as it looks to break below the R11.60 level.
“The main event this week will be the MPC rate decision tomorrow where we expect a 25bp cut in the interest rate.
“Much will be made of the tone of the MPC statement and whether we could see more cuts going forward which could cause a knee-jerk in the rand,” he said.