Rand at its best level in 14 months
The rand traded below R14.30 to the US dollar for the first time in 14 months on Thursday.
It broke through to a high of R14.14 on the day.
That's the currency's best level since before the Covid-19 pandemic, in January 2020.
In April last year, the rand reached a low of R19.26 to the dollar.
Bruce Whitfield gets insight from John Cairns, strategist at Rand Merchant Bank (RMB).
Is the rand's "astonishing" resilience at all surprising? he asks.
In a long term sense I'm not surprised at the rand strengthening, but the last few days have been a little bit remarkable.John Cairns, Strategist - Rand Merchant Bank
It does suggest that the rand wants to go stronger [in the short term] from here... but our models from the RMB research team are still suggesting that fair value on the dollar/rand is about R14.60.John Cairns, Strategist - Rand Merchant Bank
To make that clear - The lowest the dollar/rand got to the strongest the rand got in the post-Covid era was at R14.40 as seen in December. When Covid struck we were actually at R14.50John Cairns, Strategist - Rand Merchant Bank
Cairns sketches the currency's typical pattern, and considers the long-term outlook.
Since 1995 the rand has had a collapse approximately once every four years...John Cairns, Strategist - Rand Merchant Bank
Something happens, usually globally, but it can be own goals (think of that finance minister appointment), and the rand goes screaming weaker and then steadily grinds its way stronger over an extended period of time.John Cairns, Strategist - Rand Merchant Bank
Over the long-term the rand _is _weakening against all the major currencies. That comes down mainly to the fact that South Africa is running higher inflation than our trading partners.John Cairns, Strategist - Rand Merchant Bank
We're at 3.5% at the moment, so that's different to when we were at 6% relative to everyone else's 2%. So the pace of the rand depreciation in a multi-year sense is slowing down...John Cairns, Strategist - Rand Merchant Bank
Hear more detail in the audio below:
Source : https://www.123rf.com/stock-photo/south_africa_rand.html