The rand's rebound is gathering momentum

The rand’s comeback seems to be gathering momentum.

The local currency advanced a third day on Wednesday to its strongest level in five weeks, breaching two key resistance levels that stood between it and further gains.

The dollar-rand cross busted below its 50-day moving average of 18.1507 for the first time this year. It also breached the 23.6% Fibonacci retracement from April’s record-weak level at 18.044, which could set up a move to the 38.2% retracement line at 17.235.

With no local news to drive the market, traders are looking to Thursday’s South African Reserve Bank interest rate decision. Expectations are for the monetary policy committee to cut the benchmark interest rate for the fourth time this year as it seeks to support an economy that could contract as much as 16.1%.

“I suppose one would say no news is good news” for the rand, said Cristian Maggio, the head of emerging-market research at TD Securities in London. “There hasn’t been any major announcement or event in a while and the market may have come to a conclusion that the rand is undervalued relative to other EM currencies.”

The rand, Wednesday’s best emerging-market performer, advanced as much as 2% to 17.9743 per dollar by 1:22 p.m. in Johannesburg. That pared the currency’s decline this year to 22%, still the second-worst performance after Brazil’s real.

At 15:00 on Wednesday, it was trading at R18.03 to the dollar. 

ZAR/USD
17.38
(-0.05)
ZAR/GBP
22.72
(-0.10)
ZAR/EUR
20.56
(-0.12)
ZAR/AUD
12.45
(-0.12)
ZAR/JPY
0.16
(-0.19)
Gold
1942.90
(+0.07)
Silver
26.42
(+0.07)
Platinum
941.16
(+0.46)
Brent Crude
44.74
(-0.36)
Palladium
2104.73
(+0.41)
All Share
57077.48
(-0.60)
Top 40
52737.48
(-0.65)
Financial 15
10156.41
(-0.69)
Industrial 25
75107.47
(-0.84)
Resource 10
58926.78
(-0.40)
All JSE data delayed by at least 15 minutes morningstar logo
Company Snapshot
Voting Booth
Do you think it was a good idea for the government to approach the IMF for a $4.3 billion loan to fight Covid-19?
Please select an option Oops! Something went wrong, please try again later.
Results
Yes. We need the money.
11% - 1004 votes
It depends on how the funds are used.
74% - 6748 votes
No. We should have gotten the loan elsewhere.
15% - 1417 votes
Vote