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The South African rand is now trading below the key R16 at the dollar level, fueled by prospects for a Joe Biden victory over Donald Trump in the hotly contested 2020 US presidential race.
The rand reached R15.83 per dollar around 8:35 pm on Wednesday night, its best level since the first week of March. Afterwards, it dipped a bit to around R15.87, but was still trading more than 1% stronger against the USD on the day.
It was a bumpy day for the currency after it first broke the R16 level to the dollar on Tuesday.
The rand weakened 2% on Wednesday morning to rand 16.40 per dollar at 09:50. However, he ended the day stronger and is likely to get even stronger this week if Biden wins.
A Biden victory is expected to weaken the dollar as he has promised a larger US Covid-19 economic stimulus package. The Democratic leader is also expected to end Trump’s trade war with China.
“A Biden victory is expected to likely bring some stability in the face of the erratic behavior that we have come to know of Trump and as a result back riskier assets,” said Bianca Botes, CEO of Peregrine Treasury Solutions.
“A sustained break below R16.00 will open the door to the next big technical level of R15.75 [against the dollar], “she added.
“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.
