3 reasons the rand is rallying against the dollar

Cape Town – While South Africans wait with bated breath to find out what the Reserve Bank’s decision will be on interest rates, the rand has continued its gains trading at R13.46 against the dollar.


According to TreasuryOne, there are three reasons why the rand is rallying against the greenback currently:

- the US Federal Reserve held off an interest rate hike and although the institution indicated that they might increase interest rates in December the market has taken that with a pinch of salt;

- political problems in South Africa seems to have died down, which means that there is less risk associated with the currency, which now trades at levels last seen before the Hawks warned Finance Minister Pravin Gordhan to receive a warning statement;

- thirdly, there have been rumours that foreign exchange flows emanating from the SAB Miller-Inbev merger have started.

Most analysts and economists have predicted that the South African Reserve Bank (Sarb) will keep the interest rate unchanged, especially since Wednesday’s CPI data showed that inflation was slowing to 5.9%.

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