The rand has broken the R15\/$ ceiling on Wednesday after US fed chair Janet Yellen surprised on Tuesday night with dovish comments, depreciating the dollar against most currencies.<\/p>\n
\u201cA need for caution is all it took from Janet Yellen in a speech last night to see the rand move back below 15.20,\u201d said Umkhulu Consulting\u2019s Adam Phillips.<\/p>\n
By 10:15, it was trading at R14.96.<\/p>\n
Yellen highlighted the lower oil price and slower global growth, which \u201cwas all operators needed to push the dollar lower against the majors\u201d.<\/p>\n
\u201cThe chances of a hike in the US before the first (half) of 2016 has dropped to below 25% now,\u201d according to TreasuryOne. \u201cUS treasury 10Y yields also dropped below 1.80% overnight. This has caused the dollar\/rand to gain some momentum ….\u201d<\/p>\n
RMB analyst John Cairns said Yellen was \u201coutright dovish in her comments yesterday, saying explicitly that the Fed would \u2018proceed cautiously\u2019 with rate hikes, while arguing that \u2018it is too early to tell if this recent faster pace [of core inflation] will prove durable\u2019.<\/p>\n
\u201cMarket expectations of hikes have shifted back accordingly.\u201d<\/p>\n
The dollar remains the major risk for the rand, notably with the US payrolls data due on Friday, but local politics comes to the fore in the next two days, explained Cairns.<\/p>\n
Concern the rand will remain at R15\/$ comes as Finance Minister Pravin Gordhan is expected to reply to the Hawks on Wednesday regarding the alleged \u201crogue unit\u201d in Sars.<\/p>\n
\u201cMore importantly, the Constitutional Court has said that it will hand down its ruling on the Nkandla matter tomorrow, probably opening up the way for opposition parties to step up their calls for the president\u2019s removal from office,\u201d said Cairns.<\/p>\n
Phillips said \u201call eyes will be on the Concourt on Thursday with regards to a decision on Nkandla\u201d.<\/p>\n
These events could change the rand\/dollar story as the currency has proved politically volatile this year, analysts said.<\/p>\n
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