The rand steadied on Tuesday morning‚ but the short-term underlying pattern pointed to weakness.
For the past four weeks‚ the local currency has lost substantial ground against the dollar and other hard currencies‚ a development that potentially closes the window for the Reserve Bank to cut interest rates later in the year.
A little more than a week ago‚ the Bank held off on cutting rates‚ citing a pick-up in inflation expectations‚ in which the rand plays a key part.
With the ruling ANC gearing up for its national conference in December to elect a new leader to succeed President Jacob Zuma‚ analysts expect the local currency to be volatile.
Momentum Investments analysts said the Bank’s next move on policy was also likely to depend on the medium-term budget policy statement‚ to be tabled later in the month by Finance Minister Malusi Gigaba.
Rating agencies are due to deliver their reviews on SA’s debt rating‚ which is on the cusp of subinvestment grade‚ so-called junk status.
But Momentum analysts said the improving global economy‚ lower inflation profile and muted domestic confidence “still justified further monetary policy easing in the current interest rate cycle“.
In July‚ the Bank cut rates for the first time in five years as inflation moderated and returned to its 3-6% target range.
At 9.49am‚ the rand was at R13.6409 to the dollar from R13.5998‚ at R16.0100 to the euro from R15.9569 and at R18.1029 to the pound from R18.0532.
The euro was at $1.1736 from $1.1734.
by Andries Mahlangu -BusinessLIVE
