By Maarten Mittner, Business Day Live. Photo: Thinkstock
THE rand remained below the R14/$ level at midday on Friday and has momentum on its side to gather further strength. Analysts say the local currency has convincingly broken out of the bear channel that saw it weaken to R14.44 to the dollar earlier in the week.
The strength in the local currency is the result of the interest rate increase by the Reserve Bank on Thursday as well as improved emerging market sentiment.
The dollar was weaker on Thursday, thereby supporting risk-off trade, but firmed on Friday. At 11.31am the rand was at R13.9806 to the dollar from a previous close of R14.0224.
Against the euro it was at R14.9392 from R15.0527 previously and at R21.3699 against the pound from R21.4464.
The euro was at $1.0686 from a close of $1.0734.
Momentum SP Reid said that the Reserve Bank’s decision allowed the rand to finally strengthen beyond the target of about R14.06-R14.08 to the dollar, which was indicated as likely over the past few weeks.
"It was the first meaningful movement in short-term metrics on the rand for a number of weeks, indicating that additional improvement is likely."
The territory at about R13.86-R13.88 to the dollar now represented a realistic trading target of the domestic unit, Momentum SP Reid said.