The rand is continuing its strong showing after breaking through a significant level of R13.30\/$ on Wednesday on the back of a bigger risk appetite for emerging market currencies and a strengthening of the euro.<\/p>\n
\u201cThere is now a possibility that the rand could break through the R13.20\/$ and R14.20\/\u20ac levels,\u201d said John Cairns, currency strategist at RMB in a company note issued on Thursday.<\/p>\n
The rand\u2019s gains on Wednesday were justified by the rally in other currencies. The scope for a break to reach its lowest level against the US dollar since late 2015 is therefore high.<\/p>\n
\u201cIt\u2019s all about sentiment towards US President Donald Trump. Look for a rand break if he keeps to his business tone and avoids bashing China and Mexico,\u201d Cairns said. \u201cBut that\u2019s a big if, particularly if one considers his \u2018wall\u2019 and \u2018immigration\u2019 comments overnight.\u201d<\/p>\n
Cairns added that Trump is supposed to be the \u201cPresident of Uncertainty\u201d.<\/p>\n
\u201cThe lack of clarity on policies was supposed to make 2017 a volatile year, yet remarkably the \u2018fear gauge\u2019 index of expected equity volatility has dropped to its lowest level since the middle of 2014,\u201d said Cairns.<\/p>\n
Rand volatility is therefore also decreasing.<\/p>\n
Wichard Cilliers, director and head of currency dealing at TreasuryOne, said if the rand reaches R13.15\/$ on Thursday it could \u201cbriefly run back to\u201d R12.90\/$. \u201cBut this is very opportunistic and markets need to be watched closely.\u201d<\/p>\n
In the emerging market currency space, the Turkish Lira has dethroned the rand as the most volatile currency.<\/p>\n
\u201cBut if you think back to what happened politically in Turkey last year,\u201d Cilliers said, \u201cit\u2019s rather perturbing that we as a politically and financially stable nation are still ranked so high in the volatility statistics.\u201d<\/p>\n
At 13:00 the rand traded 0.30% stronger at R13.28\/$, after touching R13.19 to the greenback in earlier trade.<\/p>\n