Investec chief economist Annabel Bishop yesterday the currency was highly volatile due to multiple drivers, with the South African Reserve Bank (SARB) interest rate decision this week likely to drive it weaker on an expected cut of 25 basis points.
The rand weakened by 0.7% to R18.07 by 4pm and pulling back from a one-week high of R17.95/$1 reached on Monday. Picture: Henk Kruger / Independent NewspapersThe rand continued its wild ride as one of the world’s most volatile currencies yesterday, weakening 0.7% to R18.07 by 4pm and pulling back from a one-week high of R17.95/$1 reached on Monday following an uplift from S&P Global Ratings’ revision of South Africa ’s debt outlook to “positive” from “stable”.
“We are seeing positive moves on commodities which is, in turn having a positive effect on resource counters. Local sentiment was boosted further by S&P Global Ratings revising our outlook to positive,” he said. Moyaha also said the consumer inflation, due out today, could provide more insight into what the SARB may do tomorrow.
Any rate cut, Moyaha noted, would weaken the local currency as investors would receive a lower return for their investments in rands. He cautioned that all moves in currency depended on what US President-elect Donald Trump does when he takes office towards the end of January next year.
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