The rand steadied somewhat in late trade on Wednesday but was vulnerable to further news surrounding Finance Minister Pravin Gordhan.
The local currency had slumped more than 3% against the dollar since late on Tuesday‚ after the Treasury confirmed the receipt of a letter from the Hawks‚ asking Gordhan to present himself on Thursday.
Renewed rand weakness could put pressure on the Reserve Bank’s monetary policy committee‚ which meets in September to decide on interest rates.
A weaker rand stokes inflation‚ which moderated to an annual rate of 6% in July from 6.3% in June‚ according to the latest Statistics SA data.
The rand also faces a threat from potential strength in the dollar if the US Federal Reserve raises rates in 2016.
Sanlam Private Clients head of online trading Gerhard Lampen said the recent strength in the rand was overextended and not supported by fundamental data.
“The first reason is that the extent of the pendulum swing when the rand strengthened went a bit too far‚ as it did when it weakened.
“The GDP growth forecast actually worsened to 0% for 2016 after February 2016. Global growth forecasts have also worsened‚ leading to a negative impact on our exports‚ which in turn don’t help the rand.”
At 4.01pm‚ the rand was at R14.0944 against the dollar from R14.0007 at the previous close.
It was at R15.8747 against the euro from R15.8303 previously‚ and at R18.6905 against the pound from R18.4778 previously.
The euro was at $1.1263‚ from at $1.1307 on Tuesday.
Rand stabilises at weaker levels after shock Gordhan news
The rand steadied somewhat in late trade on Wednesday but was vulnerable to further news surrounding Finance Minister Pravin Gordhan.
The local currency had slumped more than 3% against the dollar since late on Tuesday‚ after the Treasury confirmed the receipt of a letter from the Hawks‚ asking Gordhan to present himself on Thursday.
Renewed rand weakness could put pressure on the Reserve Bank’s monetary policy committee‚ which meets in September to decide on interest rates.
A weaker rand stokes inflation‚ which moderated to an annual rate of 6% in July from 6.3% in June‚ according to the latest Statistics SA data.
The rand also faces a threat from potential strength in the dollar if the US Federal Reserve raises rates in 2016.
Sanlam Private Clients head of online trading Gerhard Lampen said the recent strength in the rand was overextended and not supported by fundamental data.
“The first reason is that the extent of the pendulum swing when the rand strengthened went a bit too far‚ as it did when it weakened.
“The GDP growth forecast actually worsened to 0% for 2016 after February 2016. Global growth forecasts have also worsened‚ leading to a negative impact on our exports‚ which in turn don’t help the rand.”
At 4.01pm‚ the rand was at R14.0944 against the dollar from R14.0007 at the previous close.
It was at R15.8747 against the euro from R15.8303 previously‚ and at R18.6905 against the pound from R18.4778 previously.
The euro was at $1.1263‚ from at $1.1307 on Tuesday.
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