The South African rand continues its recovery from record lows against the dollar in January, following talk that the Reserve Bank may hike interest rates again.<\/p>\n
The local unit has made strong gains against the dollar since hitting a record low of R17.99 on 11 January, after president Jacob Zuma defended his well-documented appointment blunder within the finance department.<\/span><\/p>\n The president inexplicably sacked finance minister, Nhanhla Nene, in December, shocking the markets and sending the rand into a tailspin –\u00a0 a record low of R17.99 <\/span>versus the dollar. <\/span><\/p>\n Within days the country had seen three different finance ministers in office, with Zuma forced into re-appointing Pravin Gordhan.<\/span><\/p>\n The rand has made good progress against the buck since mid January, after the Reserve Bank hiked interest rates by 50 basis points, to 6.75%.<\/p>\n On Wednesday, the rand gained more than 2% against the dollar – R15.48 – to its strongest level this year. This after data showed that the inflation rate has breached the South African Reserve Bank’s target of a 3% to 6% range – reaching 6.2% year-on-year\u00a0 in January 2016.<\/p>\n Economists suggested that the latest data ups the case for further interest rate hikes.<\/p>\n \u201cWhat the rand is telling us is that markets would be open for more aggressive interest rate increases,\u201d ETM Analytics market analyst Jana van Deventer told Reuters.<\/p>\n \u201cSuch interest rate increases would ultimately provide a buoying to the currency because it helps to restore the imbalances in the domestic economy and will help in attracting foreign capital.\u201d<\/p>\n Similarly, Investec chief economist Annabel Bishop told EWN: \u201cI think the Reserve Bank is looking forward to more interest rate hikes this year. I certainly anticipate them doing another 75 basis points at the very least, possibly they might not move at the MPC meeting because the rand has pulled back.\u201d<\/p>\n In morning trade on Thursday, the rand traded at R15.49 against the dollar.<\/p>\n More on the rand<\/span> <\/strong><\/p>\n How to stop the rand from hitting R25 vs the dollar<\/strong> <\/a><\/p>\n