[ 2016-07-19 ]

S.A:Rand at strongest level against pound in over a year
The rand was trading at its highest level in over
a year against the pound on Tuesday, as Turkey’s
failed coup saw global markets bounce back from
their risk-induced levels.

The rand was 1% stronger at R14.25 against the
dollar on Tuesday at 08:30. It was 1.1% stronger
at R18.85 to the pound and 0.85% stronger at
R15.79 to the euro.

This level against the pound was last seen in
early June 2015, said Umkhulu Consulting’s Adam
Phillips on Tuesday.

Phillips said he was “surprised the markets were
so bullish on emerging market currencies because
there were quite a few fatalities and a vast
number of military and judicial officials that
were rounded up by the government”.

“The ‘risk on’ that we saw yesterday still
looked tired and if one looks at local bonds they
again lost some ground,” he said. “As yet
there seems to be no effect on the rand.”

“I think a great deal of realignment has
happened internationally and we have started to
see yen positions being unwound as equities move
up as a fear of rate hikes recedes,” he said.

Global markets have bounced back from the risk-off
that was inspired by the failed coup in Turkey
last Friday, said RMB analyst Isaah Mhlanga on
Tuesday.

“It is as if nothing happened or markets are
just getting numb to political risk that’s
inspired by anti-establishment politics,” he
said.

“The rand follows global sentiment,” he said.
“It lacks direction as it waits for tomorrow’s
CPI release and the Sarb (interest rate
announcement) on Thursday. There is, however,
potential for some gains but it’s just potential
given the lack of major market-moving events.”

Source - Fin24

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