Robust euro spells rand volatility
Currency set for bumpy ride as banks shed accommodative policies
The surging euro has caught markets unaware with increased volatility set to become the norm as global central banks increasingly walk away from accommodative interest rate policies. That promises only one thing for the rand, says Investec chief economist Annabel Bishop. "And that is greater volatility." While the rand continues to gain on the dollar, up 5.5% so far in 2017, it has been affected by the stronger euro, losing 4.5% against the European currency in 2017. So far, the surge in the euro remains intact, but it may only be temporary. JPMorgan has warned the dollar will rebound later in 2017, based on higher inflation in the US and possible interest rate increases. If JPMorgan is correct, the rand could weaken in the months ahead as the currency usually trades inversely to the dollar. "A faster normalisation of global interest rates would erode the global risk-on sentiment, likely to the point of risk-off, which could see rand weakness," Bishop said. The euro firmed to $1.167...
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.
Subscribe now to unlock this article.
Support BusinessLIVE’s award-winning journalism for R129 per month (digital access only).
There’s never been a more important time to support independent journalism in SA. Our subscription packages now offer an ad-free experience for readers.
Cancel anytime.
Questions? Email helpdesk@businesslive.co.za or call 0860 52 52 00. Got a subscription voucher? Redeem it now.