A recovery in commodity currencies and stability in the oil price boosted the rand to its highest level in four months on Tuesday.<\/p>\n
By 10:00 on Tuesday, the rand was trading at R14.39\/$, which was last seen on December 6 \u2013 three days before President Jacob Zuma fired the respected finance minister Nhlanhla Nene, which sent the rand and markets tumbling to historic lows.<\/p>\n
Umkhulu Consulting\u2019s Adam Phillips said in a note on Tuesday that the recovery in the oil price was a \u201ckey driver\u201d in helping commodity currencies appreciate.<\/p>\n
\u201cThe rand\u2019s ability to rally yet again says a lot,\u201d said Rand Merchant Bank analyst John Cairns on Tuesday in a note.<\/p>\n
\u201cThe market has hit repeated hurdles in the past few weeks but, after first faltering, has managed to keep surging. This resilience has surprised even us aggressive long-term rand bulls.\u201d<\/p>\n
He said the disappointment from the failed oil meeting did not last long.<\/p>\n
\u201cBrent has led the charge, bouncing back to $43\/bbl,\u201d he said. \u201cWall Street has rallied to within 2% of its all-time high. Risk currencies have surged, notably the aussie and kiwi, which have pushed to their best levels in 10 months.\u201d<\/p>\n
Rand can only be hit by politics – for now<\/strong><\/p>\n Phillips said that, in the short term, emerging market and commodity currencies \u201clook set to continue performing\u201d.<\/p>\n \u201cI think in South Africa, one has to build in at least 75 cents for the political situation,\u201d he said. \u201cTherefore, in the short term, somewhere between R14\/$ and R14.50\/$ appears to be the medium term range, although we have to expect overshooting.\u201d<\/p>\n Phillips said he disagrees with economists who believe a ratings downgrade \u2013 which could be announced as early as June \u2013 could send the currency plummeting to R17\/$. \u201cI am not quite so drastic in my stance here,\u201d he said.<\/p>\n Rand Merchant Bank analyst Gordon Kerr said Treasury will be looking to issue the following bonds on Tuesday morning: R2030 (R650m), R2037 (R850m) and R2048 (R850m).<\/p>\n \u201cThe auction will see the introduction of a long-end stock, which was missing from last week\u2019s strong auction,\u201d he said.<\/p>\n \u201cWe expect a good performance, with all bonds clearing at or through mark-to-market. We expect the R2030 to be the best performing stock.\u201d<\/p>\n Fin24<\/a><\/p>\n What a ratings downgrade means for the rand<\/strong><\/a><\/p>\n What the rand could look like vs the dollar in 2018 \u2013 and it\u2019s not good<\/strong><\/a><\/p>\n Rand sinks as Zuma deemed safe from impeachment<\/strong><\/a><\/p>\nMore on the rand<\/h3>\n