Rand. Picture: REUTERS
Rand. Picture: REUTERS

The rand was steady on Friday morning, but remained on track for its best weekly performance against the dollar in about nine months, backing the case of those who predicted a sharp recovery once emerging markets emerged from their recent rout.

The rand was 4% stronger against the dollar on the week, its best weekly performance since mid-December, according to Iress data.

The storm that gripped emerging markets appears to have passed — or least abated — providing space and an opportunity for those looking for bargains in bonds and stocks.

The dollar had also lost ground against a basket of currencies, as global risk appetite improved.

“The exact catalyst behind why the dollar is weakening is not easy to point out, but the main contender is that fading fears over trade tensions are providing traders with a reason to take profit on dollar positions that have been building for months,” said Jameel Ahmad, global head of currency strategy and market research at FXTM

“Another round of reassuring comments from authorities in China, indicating that the yuan will not be used as a weapon during trade tensions has also been looked upon positively by the market.”

The stronger rand helps to keep inflation in check, although it tends to hurt exporters.

The continued momentum in the rand came after the Reserve Bank kept the interest rate on hold, as it weighed the rising inflation outlook against the slowing economy.

At 10.20am, the rand was at R14.2786 to the dollar, from R14.2832. It was at R16.8159 to the euro from R16.8273, and at R18.8804 to the pound from R18.9568. The euro was at $1.1776 from $1.1777.