The rand has left many market participants scratching their heads over the past year: as local politics and economics deteriorate, the currency has continued to strengthen. In the second quarter of 2017 it was particularly strong, despite SA being downgraded by all three major ratings agencies during that time.

The reality is that movements in the rand have been influenced far more by global yield differentials than local politics. Political noise has provided only for short-term counter-trend movements in a generally strengthening rand environment. Whenever the flow of effluent from political leaders’ mouths abates, the rand has tended to move stronger, illustrating that something much bigger than political noise has been the major driver behind the rand’s strength.

BL Premium

This article is reserved for our subscribers.

We have several subscription options to help you enjoy the best of our content every day, including exclusive Financial Times articles, Morningstar financial data and full digital access to The Wall Street Journal.

Already subscribed? Simply sign in below.



Questions or problems? Email helpdesk@businesslive.co.za or call 0860 52 52 00.