The rand has kicked on from its strong end to the month of May, and is now setting its sights on a move below R17.00 against the dollar.
The unit strengthened 5.6% in May and ended the month on firm footing, following the South African Reserve Bank’s support for the economy, including a fourth lending rate cut, Reuters reported.
It said that the rally in risk assets is also reflected in the weaker dollar, which has come under pressure amid a wave of protests in the United States.
Bianca Botes, executive director at Peregrine Treasury Solutions, noted that the rand managed to break below the key level of R17.30 versus the dollar, “and is now setting its sights on moving another leg stronger which could the unit trade below R17.00”.
“The risk rally witnessed across the board has been fuelled mostly by optimism surrounding an uptick in economic activity around the world, supported by massive stimulus packages. The rally in risk assets is also reflected in the soft greenback as it remains under pressure,” she said.
Various PMI numbers are due locally, in the UK and US today while the EU will release unemployment figures, Peregrine Treasury Solutions said.
The rand traded at the following levels against the major currencies in mid-morning trade on Wednesday (3 June):
- Dollar/Rand: R17.07 (-0.50%)
- Pound/Rand: R21.47 (-0.32%)
- Euro/Rand: R19.14 (-0.16%)