The rand moved back below R14:00 against the dollar on Wednesday (10 April) – its strongest position since the end of February.<\/p>\n
By 14h30, the rand had settled at R13.97 against the greenback.<\/p>\n
Analysts noted that, while it was not inconceivable for the rand to break below R14, it would likely not be due to local factors.<\/p>\n
“A strong global emerging market backdrop sees the rand holding firm against major currencies, while still lacking a clear drive to either side,” said Bianca Botes, corporate treasury manager at Peregrine Treasury Solutions.<\/p>\n
Internationally, the European Central Bank announced a widely expected hold on rates, while the UK reported slightly better than expected GDP numbers, up 0.2%. The US is also expected to publish inflation data on Wednesday.<\/p>\n
Andre Botha, senior dealer at TreasuryONE said that dovish comments the US and Europe would provide short term good news to emerging market currencies.<\/p>\n
However, emerging market currencies could lose ground in the medium term if the International Monetary Fund lowered growth forecasts for the regions, he said.<\/p>\n
On Tuesday, the IMF revised South Africa’s GDP growth estimates for 2019 down to 1.2%, from 1.4%.<\/p>\n
Locally, the market is largely fixated on the coming national elections to be held on 8 May 2019, where more currency volatility is expected.<\/p>\n
Despite this – and shrugging off a drop in business confidence in March as announced by the South African Chamber of Commerce and Industry – the rand has remained on the front foot ever since ratings agency Moody’s granted South Africa a reprieve from any rating action at the end of last month.<\/p>\n
In a research note published by the group, it carried a more optimistic tone for the country, reinforcing that South Africa’s credit standing remained at investment grade.<\/p>\n
By 14h30, this is how the rand was trading against major currencies:<\/p>\n