File: By 2.30pm, the rand had settled at R13.97 against the greenback.
JOHANNESBURG - The rand moved back below R14 against the dollar on Wednesday -- its strongest position since the end of February.
By 2.30pm, the rand had settled at R13.97 against the greenback.
Analysts noted that, while it was not inconceivable for the rand to break below R14, it would likely not be due to local factors.
“A strong global emerging market backdrop sees the rand holding firm against major currencies, while still lacking a clear drive to either side,” said Bianca Botes, corporate treasury manager at Peregrine Treasury Solutions.
Internationally, the European Central Bank announced a widely expected hold on rates, while the UK reported slightly better than expected GDP numbers, up 0.2 percent.
The US is also expected to publish inflation data on Wednesday.
Andre Botha, senior dealer at TreasuryONE said that dovish comments the US and Europe would provide short term good news to emerging market currencies.
However, emerging market currencies could lose ground in the medium term if the International Monetary Fund lowered growth forecasts for the regions, he said.
On Tuesday, the IMF revised South Africa’s GDP growth estimates for 2019 down to 1.2 percent from 1.4 percent.
Locally, the market is largely fixated on the coming national elections to be held on 8 May 2019, where more currency volatility is expected.
Despite this – and shrugging off a drop in business confidence in March as announced by the South African Chamber of Commerce and Industry – the rand has remained on the front foot ever since ratings agency Moody’s granted South Africa a reprieve from any rating action at the end of last month.
In a research note published by the group, it carried a more optimistic tone for the country, reinforcing that South Africa’s credit standing remained at investment grade.