The rand steadied on Friday morning‚ catching its breath after racing to a three-year high against the dollar‚ outpacing its emerging-market peers in the process.
Investec economist Annabel Bishop still sees further momentum in the rand if SA can successfully navigate its way through the budget‚ which Finance Minister Malusi Gigaba will table next week.
Gigaba will have his work cut out for him in trying to balance an array of competing interests‚ given the current fiscal constraints. The country has projected a budget deficit of R50.8bn in the 2017-18 financial year.
The budget will help inform Moody’s ratings review on the country‚ which is set to follow shortly after the budget.
“The good gains the rand has made could be extended towards R11.55/$‚ and move towards R11/$‚ barring any further credit rating downgrades for SA and a credit-positive budget‚” Bishop said in an e-mailed note.
The rand was on course for its best weekly gain against the dollar since December when Cyril Ramaphosa‚ now the head of state‚ became the new leader of the ANC‚ ushering in a wave of optimism about the economy‚ which has been reflected in the steady equity inflows.
The stronger rand keeps a lid on inflation‚ although it hurts exporters.
The sharp weakness in the dollar also came into the equation this week‚ despite the rise in US bond yields.
At 9.23am‚ the rand was at R11.5947 to the dollar from R11.6163‚ at R14.5363 to the euro from R14.5277‚ and at R16.3809 to the pound from R16.3784.
The euro was at $1.2536 from $1.2504.
Source: TMG Digital.