Rand on track for third consecutive weekly gain
The local currency reached its best level in three weeks on Thursday as the SA Reserve Bank kept the rate at 6.5%
The rand was on track for its third consecutive week of gains on Friday morning, getting a slight boost after the SA Reserve Bank kept the repo rate unchanged as markets expected.
The local currency reached its best level in three weeks on Thursday at R14.64/$ as the Bank kept the rate at 6.5%. The move by the Bank was largely priced in as the market factored in a looming credit rating downgrade by Moody's Investors Service and the performance of the rand.
“Even though a lot of people would love to get a cut, the reality is that given the difficulties that we've seen, that's all been priced into the rand at the moment, and we could have seen the rand weaken even further, which is not something that the SARB wants at the moment,” FNB Wealth and Investments portfolio manager Edgar Mafoko said.
A rate cut would fuel inflation, placing some pressure on the rand as higher inflation will reduce the purchasing power of the currency over time.
At 10.05am, the rand had firmed 0.29% to R14.6441/$, up 0.48% for the week. It had strengthened 0.29% to R16.1982/€ and 0.24% to R18.9164/£. The euro was flat at $1.1062.
The R2030 government bond was stronger, with the yield falling one basis point to 9.055. Bond yields move inversely to bond prices.
Gold was up 0.17% to $1,466.8/oz while platinum was down 0.55% to $909.58. Brent crude added 0.25% to $63.82 a barrel.
The local currency's gains during the week were offset by fears that US and China were no closer to signing a partial trade deal, which weighed on global market sentiment.