Rand ends week nearly 1% stronger
The rand has ended the week nearly 1% stronger against the US dollar, on the back of the outcome of the general election which was in line with market expectations.
On Friday at 16:32 the local currency was changing hands at R14.37/$.
“After starting the week off on the back foot, the rand is ending it close to 1% stronger,” said Bianca Botes from Peregrine Treasury Solutions in a note to clients on Friday.
She expects the rand to keep trading in a broad range between R14.15/$ and R14.38/$.
"It is struggling to muster enough momentum for a substantial break below the R14.15 mark,” she said.
"After experiencing some pressure last week on the back of the reignited trade war, the rand quickly gained ground against major currencies this week as market participants seeking yields piled into local bonds post-election."
"The sell-off experienced during the uncertainty leading up to what was highlighted as the most important election since 1994 was quickly reversed as Cyril Ramaphosa and the ANC remained unbeaten, securing 57% of the national vote."
Botes said the rally in the rand had brought some relief to the market, but “its sustainability lies in the balance”. Focus has now shifted to President Cyril Ramaphosa's choice of Cabinet.
- READ: Rand one of best performing currencies, but markets will look to Eskom, land reform in election aftermath
The company further stated that it expects the rand to target levels as high as R13.80, warning there was a possibility that the rand could come under pressure in the longer term as the structural woes weigh in.
“Markets participants and ratings agencies will be keeping a watchful eye on the president in the coming weeks as he gears up to announce his cabinet.”
Ramaphosa is widely expected to announce a leaner cabinet, following his swearing-in on May 25.