Home South Africa News Rand advances as risk-on sentiment recovers

Rand advances as risk-on sentiment recovers


THE rand, among a suite of risk-sensitive currencies, advanced on Monday as investors were satisfied that the Fed is in no haste to tighten policy, according to NKC Research.

Interpreting the tone of Fed chair Jerome Powell’s comments at the Jackson Hole Symposium as dovish, risk appetite improved in the wake of the virtual meetings.

Powell’s remarks were mostly as expected: he confirmed that the conditions for tapering asset purchases are falling into place but stressed that tapering shouldn’t be viewed as a signal that rate hikes would soon follow.

Powell may have been more dovish than expected in making his case for the recent spike in inflation to be transitory, also arguing that responding to temporary fluctuations in inflation might do more harm than good.

At the close of local trade, the rand quoted 0.8 percent stronger at R14.60/$, after trading in range of R14.60/$ to R14.75/$. The rand traded flat overnight. The expected range of the rand against the dollar today is R14.50/$ to R14.80/$.

South African bourse

In local news, the share prices of Naspers and Prosus took a tumble as the Chinese government escalated its restrictions on teen gaming playing time, which is Tencent’s biggest business. The JSE All Share (-0.86 percent) ended lower yesterday, dragged down by technology (-3.24 percent) and industrials (-1.57 percent). In the overall emerging market sphere, the MSCI Emerging Market Index (+1.0 percent) traded higher.

Brent crude oil

The Brent oil price traded lower yesterday as the hurricane which forced shutdowns of US Gulf oil production weakened and crude production would be able to resume sooner than expected, though power outages will continue to pose challenges. Opec+ is expected to continue with their planned increase of oil output. At the close of local trade, benchmark Brent crude futures quoted 0.55 percent lower at $72.4pb. Crude prices ticked higher during Asian trade this morning.