Rand keeps gaining despite US Fed rate hike

rand,currency

The rand touched R14/$ on Wednesday evening, trading 0.61% stronger at R14.03/$ by 6.00pm SA time.

It had earlier in the day surprised analysts by firming
during the day and maintaining its gains even after an interest rate hike by
the US Federal Reserve Bank.

Bianca Botes of Peregrine Treasury Solutions said in a
morning note that market watchers had not expected the local currency’s
behaviour.

Andre Botha, Senior Dealer at TreasuryOne, said: “As
expected, the US hiked interest rates by another 25 basis points yesterday
evening. Furthermore, they indicated that there could be a hike in December and
three more in 2019. So basically, they followed the script as was outlined in
the past couple of days. It was not surprising to see the US dollar trading
flat against during the announcement as the rate hike and forward path was
priced in.

“What was not expected was the reaction of the Rand
during evening trade as we broke through the R14.1000 level in late evening
trade. Reasons for this move are a little vague but it could be that the risk
sentiment has turned in favour of emerging markets and that the market is
taking President Ramaphosa at his word that land reform would not hinder the
agriculture once it starts being implemented.”

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