The Rand benefited along with other emerging markets yesterday in risk on trade. The Rand reached a new 1-year low of R14.4158/$ and ended the session at R14.4557/$ allowing a recovery of just short of 5% in the first half of February.
On local shores, active cases of COVID-19 continue to reduce day by day, providing the hope that the President will lift some restrictions in the near future and allowing additional economic activity to spur recovery. Whilst a range of factors have helped the Rand recover over the last month, it is important to note that the underlying fiscal issues in our country are still present and continued strength is unfortunately not something that we can rely on long-term.
There were no real data releases driving the ZAR yesterday and it seems to be the same situation for today, and markets will keep a keen eye on international headlines, particularly those around the US Stimulus plan.
The US may have been out for a long weekend yesterday, but that didn’t stop the dollar from taking losses in intraday trade. The dollar index came under pressure as market participants grew optimistic of the US Stimulus plan, with President Joe Biden giving it an extra push. The dollar index a low of 90.266 before ending the session at 90.480.
The Euro gained slightly yesterday as a result of increased sentiment, but gains were limited as soft PMI data prints signalled that the Euro Zone would be hit with another recession due to extended lockdowns. The single currency reached a high of $1.2145 and ended the session at $1.2129.
Pound Sterling continued to surge ahead, boosted by the weaker dollar and progress in the rollout of the vaccine across the UK. The pound reached a new high of $1.3919 yesterday, last seen in April 2018 and doesn’t seem to be showing signs of slowing down. The pound ended the session at $1.3903.
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