The rand continues to build on the gains it made last week against the dollar and other global currencies.
The ZAR has been having one of the best rallies in recent memory and was trading at around R17.06 against the dollar at 8.30am on Monday.
The rand was trading at around R19.05 to the euro and around R22.84 to the pound.
According to Reuters analysts, the ZAR has strengthened to a 20-month high against the dollar.
The strength the rand has shown over the last few weeks has yet to be seen since February 2023 and could be attributed to interest rate cuts by the South African Reserve Bank (SARB) and US Federal Reserve earlier this month.
Will this continued rally continue?
Sales traders at the IG Group told Reuters that the rand’s strength may continue to get better against global currencies.
Kavir Surujhlal, a sales trader at the IG Group said last week that the rand’s strength may continue and hit the R17 mark.
“The momentum is likely to continue in favour of our local currency with there being little resistance until the R17/$ psychological level,” Surujhlal added.
Shaun Murison, senior market analyst at IG also added that the rand has continued to strengthen due to a favourable risk-on trading environment and a generally weaker US dollar.
Andre Cilliers, currency strategist at TreasuryONE said earlier last week that the rand will remain below the R18 mark.
“The rand is likely to remain within a R17.40 to R17.70 range in the short term as it tracks international moves but we could see further profit-taking, given the rand’s recent strong run,” Cilliers noted.
There has also been improvement in South Africa’s risk profile after the coalition government was formed and this has contributed to SA’s currency’s strength.
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