The rand firmed against the dollar on Monday in anticipation of economic intervention by the US Federal Reserve on Thursday, dipping below R17/$.
It firmed sharply against the pound and euro as well, as the top performing emerging market currency alongside the Mexican peso.
Bianca Botes, executive director at Peregrine Treasury Solutions, said the local currency is taking advantage of the current risk-on environment which is creating an opportunity for emerging markets to gain momentum.
According to Botes, this strengthening of the rand, after a few weeks trading above R17/$ and hitting a 10-week low at the beginning of August, is due to the US Jackson Hole symposium, set to start on Thursday. The symposium will bring together economists, academics, market participants and government representatives to discuss long-term policy considerations.
“We expect to see greater clarity in terms of the state of the US economy as well as the intervention we can expect from the US Federal Reserve,” Botes said.
“As it stands, markets are expecting more stimulus to be deployed which would see the dollar come under pressure. We anticipate those additional funds would make their way into riskier assets.”
The greenback has taken strain amid US-China tensions, the US elections in November and the coronavirus pandemic.
The rand, meanwhile, has maintained momentum, opening the day at around R17.0532/$. By 17:00 on Monday, the local unit traded R16.9343/$. – news24.com