EDITORIAL: Rand strength no reason for complacency
The gain since the end of 2018 masks what has been a terrible February, in which it has shed more than 4%
The rally by the rand, largely fuelled by the failure of the US Federal Reserve to follow up on its hawkish outlook in 2018, will probably lead to a sense of vindication for those who argued that the Reserve Bank was too hasty in raising interest rates in 2019.Prospects of a volatile currency, if not necessarily a weak one, loomed large when policymakers decided to increase the repo rate to 6.75% in November. While the rand was not misbehaving at the time, it actually had gained almost 4% against the dollar between meetings. The monetary policy committee was not convinced that this would last.“Tighter global financial conditions, financial market volatility and the change in investor sentiment towards emerging markets remain key external risks to the rand,” it said. “Over the medium term, it is likely that the rand, along with other emerging market currencies, will remain volatile.” The rand is down less than 1% since that meeting and is up more than 3% in 2019 so far, the best perf...
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