The rand remained range-bound with a weaker bias against major global currencies shortly before midday on Friday‚ as investors watch for direction from the ANC national policy conference‚ which began earlier in the day.
Possible risk events from the conference come as the local currency is already under pressure from global risk-off trade following signs from several central banks that they are preparing to tighten monetary policy.
There are fears in some quarters that the ANC will shift to populist policies in a bid to retain support‚ such as revising transformation targets in various sectors or targeting the independence of the Reserve Bank.
Growth must dominate economic discussion at conference - ZumaDiscussions on the economy at the ANC’s national policy conference have to be centered around how to reignite growth‚ President Jacob Zuma said during his opening address on Friday.
“The ANC is currently struggling to gain traction with the narrative that the country’s low growth is the fault of the global economy or the domestic private sector‚” Nomura emerging markets economist Peter Attard Montalto said in a note.
The effect on the rand of comments by European Central Bank president Mario Draghi earlier in the week had been “hidden somewhat” due to recent dollar weakness‚ Rand Merchant Bank currency strategist John Cairns said.
“These market moves are‚ thankfully‚ a little more rational than seen midweek. It’s a clear case of risk off‚ yield weakness and euro gains‚” said Cairns.
The rand would have weakened further had it not been for recent global data releases‚ RMB said.
On Thursday first-quarter US GDP growth was revised upwards from 1.2% to 1.4%‚ while on Friday Chinese purchasing managers index (PMI) figures came in better than expected at 51.7 points.
At 11.30am‚ the rand was at R13.0792 to the dollar from Thursday’s R13.0225‚ at R14.9011 to the euro from R14.8976 and at R16.9786 to the pound from R16.9347.
The euro was at $1.1399 from $1.1440.
Risk-off sentiment and ANC conference put rand under pressure
The rand remained range-bound with a weaker bias against major global currencies shortly before midday on Friday‚ as investors watch for direction from the ANC national policy conference‚ which began earlier in the day.
Possible risk events from the conference come as the local currency is already under pressure from global risk-off trade following signs from several central banks that they are preparing to tighten monetary policy.
There are fears in some quarters that the ANC will shift to populist policies in a bid to retain support‚ such as revising transformation targets in various sectors or targeting the independence of the Reserve Bank.
“The ANC is currently struggling to gain traction with the narrative that the country’s low growth is the fault of the global economy or the domestic private sector‚” Nomura emerging markets economist Peter Attard Montalto said in a note.
The effect on the rand of comments by European Central Bank president Mario Draghi earlier in the week had been “hidden somewhat” due to recent dollar weakness‚ Rand Merchant Bank currency strategist John Cairns said.
“These market moves are‚ thankfully‚ a little more rational than seen midweek. It’s a clear case of risk off‚ yield weakness and euro gains‚” said Cairns.
The rand would have weakened further had it not been for recent global data releases‚ RMB said.
On Thursday first-quarter US GDP growth was revised upwards from 1.2% to 1.4%‚ while on Friday Chinese purchasing managers index (PMI) figures came in better than expected at 51.7 points.
At 11.30am‚ the rand was at R13.0792 to the dollar from Thursday’s R13.0225‚ at R14.9011 to the euro from R14.8976 and at R16.9786 to the pound from R16.9347.
The euro was at $1.1399 from $1.1440.
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