Rand Report: ZAR finally showing signs of life

The rand has been showing resilience amidst conflict in the Middle East and surging bond yields. It had a strong start to the week’s trading on Monday, jumping 1% against the Dollar to continue its short-term uptrend against the major currencies. This strength comes ahead of the South African central bank monetary policy review on Tuesday followed by the local inflation data being released on Wednesday. 

ALSO READ: Shoprite: How Government can reduce food insecurity

The rand retreated from a high of R19.44 last week to a low of around R18.70 and is currently sitting at R18.81. Similarly, the rand has corrected from a high of R23.73 against the British Pound last week to a low of around R22.70 this week – with the current rate sitting at R22.88.  

These moves have been impressive considering the Dollar Index (DXY) consolidating above previous resistance at around 105.7 after breaking out. It may precipitate a move back below support and back into the range which, technically speaking, would be a buy signal for the rand and other emerging-market currencies. 

The rand strength comes on the back of improved market sentiment with investors starting to increase their risk-on stance, coupled with a slightly weaker Dollar. 

The rand, like most emerging-market currencies, is highly susceptible to global drivers such as Dollar movement and geopolitical tensions. Therefore, fears of the Palestinian conflict escalating remains a concern to the rand in the short-term. 

UPCOMING MARKET EVENTS 

Tuesday, 17 October

• USD: Retail sales (September)
• ZAR: South African Reserve Bank monetary policy review

Wednesday, 18 October

• GBP: Inflation rate year-on-year (September)
• ZAR: South African inflation rate month-on-month (September)

Thursday, 19 October

• USD: Fed Chair Powell speech
• GBP: Retail sales month-on-month (September)

Get our Daily Rand Report delivered straight to your inbox every weekday to keep on top of everything happening with the ZAR. 

Check out the Sable International Currency Zone to get the latest live exchange rates and easily transfer your money into or out of South Africa.

ALSO READ: Rand Report: Continued volatility amidst global uncertainty