Rand forecasted to be on the back foot this week

CAPE TOWN- The rand has started the week on the back foot against the dollar, it is trading above R12 against the greenback.

At 10:10am this morning the local currency was trading R12.04 against the dollar after it opened 11.97$.

Andre Botha a dealer at TreasuryONE has said the rand had strengthened somewhat on Friday on news that the prosecution of former President Jacob Zuma would continue. But the news did not affect it too long as the rand weakened afterwards.

He said, “The reversal was brief as the rand broke above the R12/$ level quite quickly as the US dollar flexed its muscle this [Monday] morning in anticipation of the Federal Open Market Committee meeting and interest rate decision later on this week.”

“There are enough whispers and uneasiness in the market surrounding a possible inflation overshoot from the US that the Fed can indicate that they will look to hike rates more aggressively.”

Bianca Botes a corporate manager of Peregine Treasury solutions anticipates a rate hike of 25 basis points, she said,

“If it materialises, it would mark the first of three to four expected hikes this year.”

Rating agency Moody’s is expected to announce whether or not to downgrade SA’s sovereign credit rating on Monday.

Moody has the country one notch above junk status, the only rating agency that has not downgraded SA into non-investment grade.

Photo Credit- BusinessToday

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