Rand gains momentum

Rand gains momentum


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THE rand remained resilient as US Federal Reserve-related risk appetite boosted risk currencies, according to NKC Research.

Fed chairperson Jerome Powell’s speech at the recent Jackson Hole Symposium did not materially alter the outlook for Fed policy, but it did clarify the distinction between the timing of tapering and the rates lift-off.

The bar required for raising the Fed funds rate was increased a notch, allaying market fears of a repeat of the 2013 “taper tantrum” episode.

NKC believes that the outlook for rates matters more for asset prices than the pace of Fed tapering, and it was not too concerned about the gradual withdrawal of stimulus, because it was likely to happen over an extended period.

It was expected that the immediate post-Jackson Hole environment would be positive for risk sentiment, with above-trend growth expected to last well into next year.

At the close of local trade, the rand was 0.9 percent stronger at R14.37 to the dollar, after trading in range of R14.37 to R14.54. The rand ticked lower overnight. The expected range of the rand against the dollar today was R14.30 to R14.70.

South African bourse

The FTSE/JSE All Share Index closed -0.67 percent lower yesterday, as losses in the resources sector (-3.9 percent) outweighed gains in the technology (+4.6 percent) and industrial (+1.4 percent) sectors. In the overall emerging market sphere, the MSCI Emerging Market Index traded 0.3 percent higher.

Brent crude oil

Opec+ looks set to increase oil output as planned. At the close of local trade, benchmark Brent crude futures were 2 percent lower at $70.70 per barrel. The aftermath of hurricane Ida, however, continues to put upward pressure on the oil price as refineries struggle with uncertainty as to when they will be able to restart operations. Crude prices ticked higher during Asian trade this morning.


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