The Rand has recovered some of its losses against the US Dollar and is set to move below the psychologically key level of R9 to the Dollar as the end of yesterday’s miners’ strike calmed investor nerves.
The Rand has traded above the R9 level for the past week after economic data showed that South Africa posted a record shortfall on the trade account and has weakened over the past week due to risk aversion among investors due to the continued threat of labour unrest. Nerves were settled on Wednesday however as the striking miners returned to work at the Lonmin owned Marikana platinum mine.
Today we can expect to see the currency breach the R9 barrier as events in the Eurozone and other commodity based currencies led to an improvement in risk appetite.
The Euro has held gains and the Australian Dollar have strengthened on strong GDP data. The new record achieved by the DOW Jones industrial Average has also boosted demand for risk.
“The rand is prone to move on bad headlines, and move quite aggressively. So we need to make sure we don’t have any sudden hiccups on the headlines,” Bryson said, adding traders are waiting for a European Central Bank policy decision on Thursday and US non-farm payrolls data on Friday before making big moves.
For the rest of the week we can expect the Rand to remain more volatile than its peer currencies as it remains vulnerable to developments in Europe and elsewhere. With uncertainty continuing to be a major factor for Europe the Rand is effectively at the mercy of the single currencies movements.
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