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The rand’s rally of last week has come to an abrupt end, with the local currency losing over 3 percent yesterday to breach R17/$. This follows a grim economic outlook published by the US Federal Reserve on Wednesday — which included a pledge to keep interest rates on the low side until 2022 — as well as a fresh batch of unemployment claims.
“It seems that the fallout after the Fed meeting yesterday was the final straw that caused the rand to reverse and give back some of the gains of the past week,” Andre Botha, senior currency dealer at TreasuryONE, said yesterday afternoon.
Calling the reversal “quite an aggressive pull back”, Botes said the rand’s losses had been amplified by a lack of liquidity in the market.
“It’s funny how a day can turn sentiment, and it seems that the overstretch in the rand has finally happened and we can expect [it] to trade a little weaker tonight,” he added.
At 5:50pm the rand was trading 3,59 percent down at R17,11/$, a further dip from R17,07/$ at 5pm. — Bloomberg.
Online Reporter