Rand remains weak as markets wait for direction

John Johnson

Global Courant 2023-05-09 12:21:23

The South African rand remains in a weak position ahead of a shift in global markets, said Annabel Bishop, Investec’s chief economist.

Despite a slight strengthening on Monday (May 8) amid a softer dollar, the local unit has been hovering around R18.30/USD for some time.

According to Bishop, the rand is looking for a “directional driver” as a risk averse environment persists in global financial markets, including emerging markets and currencies.

- Advertisement -

Bishop said this still leaves some room for a repeat of the last MPC move when the SARB raised bank rates by 50 basis points.

As a result of the surprise increase, the country’s repo rate rose to 7.75%, pushing the prime lending rate to its highest level in 14 years at 11.25%.

Despite expectations that the SARB’s cycle of rate hikes would soon end, the central bank remained determined to contain inflation to bring it within the target range of 3% to 6%.

- Advertisement -