Picture: REUTERS
Picture: REUTERS

The rand was firmer on Monday afternoon as focus remains on US monetary policy. Investors are betting on the likelihood that the US Federal Reserve will cut interest rates at its meeting next week. 

Talk of monetary policy easing in the US has overshadowed local political developments, with the rand remaining fairly resistant below R14/$.

Analysts say the ongoing battle between President Cyril Ramaphosa and public protector Busisiwe Mkhwebane may have a minor effect on the rand as it poses a threat to Ramaphosa’s promised structural reform. 

“It has had negative consequences in the short term. It seems to be weakening the president and shifting his focus thereby slowing down the reform agenda,” RMB global market strategist John Cairns says.

At 3.25pm, the rand had strengthened 0.47% to R13.8622, 0.45% to R15.5543/€ and 0.65% to R17.30/£. The euro was little changed at $1.1216.

Gold was flat at $1,425.87/oz while platinum had gained 0.65% to $850.47. Brent crude was 0.84% higher at $63.34 a barrel owing to continuing tension in the Middle East. 

Investors will now turn their attention to SA inflation data for June, due on Wednesday, after the Reserve Bank opted to cut the repo rate 25 basis points last week.

“Should inflation fall to 4.4% in June from the 4.5% in May, this could offer the Bank more flexibility for another interest-rate cut in 2019 in an effort to boost consumption and economic growth.” FXTM research analyst Lukman Otunuga said in a note.