Volatile rand makes up for losses; gains 1%

After falling almost 2% against the dollar on Tuesday, the rand gained back some ground in early trade on Wednesday morning, with analysts expecting "jittery" trade.

The local currency was trading 1% stronger against the greenback at 10:20. It opened the sessions at R12.69/$, and was changing hands at R12.56/$ by 10:20. 

"The market remains jittery and volatility can be expected throughout the day," said Bianca Botes, corporate treasury manager at Peregrine Treasury Solutions.

Andre Botha, a dealer at TreasuryONE, said Tuesday's sharp decline in the currency's value was caused by recent political developments in Italy.  

"The impasse in the Italian government had some far-reaching effects, with the euro taking a beating as investors dumped any exposure to Italy and moved into US Treasury Bonds. Global equity markets also sold off, which had a bearing on emerging markets as the market turned decidedly risk-off."

Botha said the developments in Italy would continue to affect the local currency, which coould include for sudden swings. 

The rand is also expected to react to the release of preliminary US GDP figures in the US in the afternoon. 

"Should the number beat expectations we could see the emerging market currencies on the back foot again and the Rand trading near the R12.80 levels post-release."

But should US GDP figures fail to impress the rand could benefit. 

NKC African Economics, in a research note, said it expected te local unit to trade in a range of between R12.50/$ and R12.75/$.

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