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By Sizwe Dlamini 
November 4, 2020
CAPE TOWN – The rand broke the R16 / $ mark against the dollar on Wednesday, touching R15.97 / $ during intraday trading due to a widening gap in the US presidential race between Donald Trump, with Biden a head.
On Tuesday, the dollar rallied from a week low as polls were slowly counting, showing that Trump and Biden were side by side.
At 5 pm, the national currency was offered at R16.02 per dollar, R18.76 per euro and R20.80 against the pound.
TreasuryONE currency trader Andre Botha said that with all the volatility in the market, anything was possible. “We will have to be attentive to what happens. If the US elections don’t come up with a clear winner and are contested, then we could have a tough road. “
Schroders chief economist Keith Wade did not rule out the possibility of a continuation of the status quo, with a Trump presidency and a divided Congress, saying this was an outcome that would see less stimulus and the relaunch of trade wars, factors that would limit. increase.
Markets, which had started to factor in a Democratic sweep and a major stimulus bill, are now holding down their growth expectations. Estimates had suggested this could have been worth an additional 1 percentage point of growth in the US next year, ”Wade said.
Peregrine Treasury Solutions CEO Bianca Botes said it was expected that a Biden victory would likely bring some stability in the face of the erratic behavior we have come to know of Trump and, as a result, back riskier assets.
He said that a sustained break below R16 / $ would open the door to the next big technical level of R15.75 / $ for the national currency.
“In the short term, however, we can expect more volatility until the election result is confirmed and there will certainly be more instability if Trump challenges the election,” Botes said.
For now, no clear outcome is likely the worst possible outcome from an economic perspective as uncertainty mounts and stimulus hopes fade.
BUSINESS REPORT
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