The rand continued its rally on Monday, outperforming other currencies a few days before the South African Reserve Bank (Sarb) announces its latest interest rate decision, with analysts expecting the repo rate to remain at 7%.<\/p>\n
Trading 0.8% stronger against the dollar at R14.09 in morning trade, the rand was one of only three liquid currencies to gain against the dollar last week and has firmed around 4% versus its peer risk currencies, according to RMB analyst John Cairns.<\/p>\n
\u201cThe rand continues to outperform massively,\u201d he said in a note on Monday. \u201cEffectively, this represents the local risk premium being unwound: more than half of the blowout since the latest Hawks-Gordhan story has been reversed.<\/p>\n
\u201cRand gains have come despite the negative global backdrop,\u201d he added. \u201cThe higher-than-expected US CPI figure and the large fine for Deutsche Bank have created generalised risk aversion as well as strong dollar gains.\u201d<\/p>\n
Consumer price inflation data \u2013 with the figure currently at 6% – is out on Wednesday, while the Sarb will announce its monetary policy committee decision on interest rates the following day.<\/p>\n
\u201cThe central bank event risk is concentrated from Wednesday morning through Thursday afternoon,\u201d said Cairns. \u201cWe expect the Sarb to remain on hold.<\/p>\n
\u201cEvent risk this week is all about central banks, although almost certainly more about what they say than do,\u201d he said. \u201cThe market prices only a 12% chance of the (US) Fed acting (on a rate hike), but we\u2019ll all be watching for signs on whether they will hike in December.<\/p>\n
\u201cThere is a bigger probability that the BoJ (Bank of Japan) cuts rates \u2014 which would potentially even get USD\/ZAR through R14.00.”<\/p>\n
Umkhulu Consulting analyst Adam Phillips said traders pushed the rand too hard, which explains its positive gains.<\/p>\n
\u201cMaybe operators read that the public protector is still after our president and has interviewed a number of government officials,\u201d he said. \u201cEven (Finance Minister Pravin) Gordhan was questioned and I presume he was happy to attend, unlike when he was asked to by the Hawks.\u201d<\/p>\n
Public Protector Thuli Madonsela served a subpoena on the secretary of Cabinet as part of her investigations into state capture last week, as she moves to release a report into allegations that the Gupta family influenced cabinet post decisions.<\/p>\n
News24<\/strong><\/a><\/p>\n Get ready for R16, R17 or even R19 to the dollar this year: economists<\/a><\/strong><\/p>\nMore on the rand<\/h3>\n