Rand ‘rides wave’ as Turkish lira firms

The rand has continued to strengthen on the back of lower-than-expected US retail sales as well as a firmer Turkish lira, firming to a high of R14.28 to the greenback on Tuesday morning. 

By 10:09, the rand was trading at R14.30/$. 

Global Head of Currency Strategy and Market Research at FXTM, Jameel Ahmad said in a morning note that the rand was “riding the wave” from the lira hitting its strongest level in nearly two months against the dollar.

“The lira has managed to gain around 1.5% … over the past two days, which has carried a knock-on positive sentiment to other higher-yielding EM currencies. Both the Russian ruble and the South African rand have benefitted from strength in the lira,” he said.

“What might help the rand over the remainder of the week are indications that capital flows are coming back into Gold, which suggests that investors are turning more cautious on the USD and showing interest in other safe-haven investments.”

TreasuryONE’s Wichard Cilliers said in a morning note to clients: “Emerging market sentiment continued to improve [on Monday] with most currencies trading stronger against the dollar. The dollar was further placed on the back foot with the release of weaker than expected retail sales figures. The dollar index sliding below the 95.00 level to 94.70 yesterday.

“We have seen US treasury yields trade a bit higher yesterday and this could place a bit of a dampener on the risk on sentiment we currently have. For the day, we look to buy USD/ZAR on the dips to target a move back to R14.50.”

NKC African Economics said in a statement that it expected the local currency to trade in a range from R14.25/$ to R14.55/$.

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