The rand’s rally continued on Thursday afternoon after US Federal Reserve chair Jerome Powell’s dovish testimony saw the it reach its best level in five months in intra-day trade.   The first day of Powell’s two-day testimony before US law makers served as an indication to investors that an interest-rate cut is on the cards at the Fed’s next meeting later this month. Powell said the US-China trade war and concern about global growth have weighed on the US’s economic outlook. Expectations that the Fed will ease monetary policy pushed the rand to below R13.90/$.

“As can be seen from equities and risky assets, the dovish bias of the committee still holds,” currency trader at Standard Bank Warrick Butler said in a note. “The chances of a 25-basis-point (bps) cut at the end of the month are almost at 100% now with the market re-assessing their earlier predictions of another 25bps cut before the end of the year, albeit with slightly less enthusiasm now.”..

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