Rand Recovers on Easing Geopolitical Tensions
The South African rand strengthened this week as easing geopolitical tensions in the Middle East and a weaker US dollar helped markets recover from last week's volatility following the South African Reserve Bank's (Sarb) decision to leave interest rates unchanged.
After briefly weakening to R16.98 against the US dollar on Friday, the local currency recovered to around R16.70 on Monday morning, driven by domestic events rather than US dollar movements and global risk appetite.
Investec chief economist Annabel Bishop said the sell-off was largely driven by markets unwinding expectations of a rate increase, but noted that the weakness was unlikely to persist.
The decline in the US dollar index from 100.69 on Thursday last week to 91.44 on Monday also helped stabilise the rand, with the domestic currency benefiting from the shift in global investor sentiment.