The dollar and the rand. Picture: REUTERS, SIPHIWE SIBEKO
The dollar and the rand. Picture: REUTERS, SIPHIWE SIBEKO

The rand was off to a positive start on Monday, stretching its recent run against the dollar, which helps to ward off the threat of another fuel increase in the near future.

In the second quarter, a weaker rand and elevated oil prices conspired to push up fuel prices to record peaks, raising inflation concerns.

But the situation has been relatively positive since the start of July, with the rand gaining about 4% to dollar despite the fear of a global trade war casting a shadow on global markets.

The US and China in particular have been embroiled in a tit-for-tat trade spat, raising fears of a potential fallout on the global economy.

"Markets generally prospered last week despite the almighty $200bn tariff that the US levied against Chinese goods, with little pushback from Beijing," said Nema Ramkhelawan-Bhana, an analyst at Rand Merchant Bank.

"The VIX — the perceived fear index — closed at a near one-month low of 12.18 while the rand, like many of its compatriot high-yielding commodity currencies, ended the week in the green around R13.25/$. But as we’ve come to expect, the rand’s appreciatory bias is less than certain," she said.

The rand could get impetus from local inflation data on Wednesday, with markets expecting headline inflation to have quickened to an annual rate of 4.8% in June, from 4.4% in May.

The inflation data will be followed a day later by the Reserve Bank’s monetary policy committee, which is widely expected to hold on hold rates steady.

ETM Analytics Halen Bothma said the committee could adopt a hawkish line in its outlook, although he said it was unlikely to raise rates in the foreseeable future due to weak local economic growth.

Bothma expects inflation to remain within the Bank’s 3%-6% target band, despite the recent pick-up in price pressures.

Markets will also get a sense of how the Bank perceives the fear of a global trade war and the extent to which it could shape up its policy.

At 09.51, the rand was at R13.2581 to the dollar from R13.2645. It was at R15.4971 to the euro from R15.5082, and R17.5429 to the pound from R17.5470. The euro was at $1.1688 from $1.1692.