Fri Oct 20 08:51:10 SAST 2017
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Rand breaks through R13 to the dollar

By Maarten Mittner | 2017-08-29 17:08:33.0

The rand strengthened through R13 to the dollar in late trade on Tuesday as the latter weakened to a 28-month low against the euro‚ in risk-off trade due to renewed tension on the Korean peninsula.

The dollar has been on the back foot since the conclusion of the Jackson Hole symposium of central bankers over the weekend‚ as US Federal Reserve chairperson Janet Yellen provided little further detail on the expected interest-rate trajectory for the year ahead.

North Korea’s launch of a ballistic missile over northern Japan‚ which exploded over a remote area in the Pacific‚ worsened the prospects for the greenback as investors sought gold‚ US treasuries and the yen as safe-haven investments.

The rand failed to firm on the weaker dollar immediately following the symposium‚ but caught up in late trade on Tuesday‚ reaching a best level of R12.9499.

At 3.30pm‚ the rand was at R12.9777 from R13.0407‚ at R15.6134 to the euro from R15.6272‚ and at R16.8066 to the pound from R16.8707.

The euro was at $1.2031 from $1.1979.

Traders used the Jackson Hole conference as another opportunity to sell the dollar after Yellen didn’t provide any clues on US interest rate policy‚ said FXTM analyst Jameel Ahmad.

 He said investors were using any opportunity possible to sell the dollar‚ and they have found another one in the recent indications that the Fed might be coming to a pause in its interest-rate increase cycle. “For the dollar to recover from its current levels‚ investors need further guidance on monetary policy‚” Ahmad said.

Yellen’s current term as Fed chairperson ends in February 2018. There is speculation that US President Donald Trump’s economic advisor‚ Gary Cohn‚ could be in the running to replace her‚ adding further pressure to the dollar.