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The rand broke below the R15 / $ mark last week.
- An increase in risk appetite and a weaker dollar have made emerging market currencies stronger.
- The rand started the day at R14.82 / $ and has since strengthened to R14.27 per dollar.
- Last week, the rand broke the R15 / $ mark for the first time in 10 months.
A surge in risk appetite has kept emerging market currencies, including the rand, firm on Thursday.
The local unit started the day at R14.82 / $ and strengthened as much as 0.60% to R14.72 / $ mid-morning. At noon it was trading around R14.73 per dollar.
Andre Botha, Senior Trader at TreasuryONE, said that “increased optimism” about a Brexit deal and news of a US stimulus deal, expected to be reached before Christmas, were some of the factors that contributed to “the appetite for risk will increase and the dollar will weaken. ” Other factors include the announcement by the United States Federal Reserve that interest rates will remain at zero and the bond purchase program in the country will continue until the economy recovers, unemployment declines and an inflation target of 2%.
Botha believes that if the rand breaks below R14.70 / $, there will be room for it to further strengthen to R14.50 / $.
Last week, the rand broke below the R15 / $ mark for the first time in 10 months and strengthened against other major currencies, the Office of Economic Research noted earlier this week.
Supporting factors include stronger GDP figures, as well as global developments related to the distribution of Covid-19 vaccines in the UK and the approval of a vaccine in the US.
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