Rand recovers slightly against the dollar
The rand strengthened against the dollar on Tuesday afternoon, tracking the euro, which gained after German GDP data for the third quarter beat market expectations.
The euro reached a two-and-a-half week high to the greenback after Germany’s GDP expanded 2.8% in the third quarter, year on year, above a Trading Economics forecast of 2.2%.
The current recovery in global activity was strongly contributing to German economic growth, with foreign trade the key driver of buoyant growth, Barclay’s Research analysts said.
Data releases in both the US and eurozone are being closely watched, as the market looks for possible signs of relative monetary-policy divergence.
The rand, however, is expected to remain under significant pressure as local politics remains in focus, due to the ANC national elective conference in December.
The rand reached its weakest level this year on Monday, after news broke that President Jacob Zuma was ready to announce a plan for free tertiary education. This coincided with the resignation of Treasury budget-head Michael Sachs, and ongoing ANC squabbles over the validity of the party’s most recent Eastern Cape provincial conference.
TreasuryOne dealer Andre Botha said it only took one unexpected headline to change the direction of the rand markedly.
At 3pm, the rand was at R14.382 to the dollar from R14.4767, at R16.8959 to the euro from R16.8834, and R18.8528 to the pound from R18.9887.
The euro was at $1.1747 from $1.1667.