South Africa's rand firms again after stalled rally
- At 0645 GMT the rand was 0.14% firmer at 16.3125 per dollar compared to a close of 16.3350 on Friday in New York.
JOHANNESBURG: South Africa's rand firmed slightly early on Monday, poised to resume last week's stalled rally as demand for emerging market currencies returned.
At 0645 GMT the rand was 0.14% firmer at 16.3125 per dollar compared to a close of 16.3350 on Friday in New York.
The rand marched to a six-month best of 16.0950 following the local central bank's decision on Thursday to keep lending rates unchanged, signalling the conclusion of 2020's easing cycle that saw 300 basis points of cuts.
With the United Stated's central bank last week confirming rates there would remain lower for longer, South Africa's rate decision is set to maintain the lure of the rand's high yield, or carry.
"The USD-ZAR's recent downtrend may very well persist in the weeks ahead given loose global monetary conditions and rand-supportive current account dynamics," said economists at ETM Analytics in a note.
"Although South Africa's extreme fiscal risks will likely begin to limit the ZAR's ability to recover towards the end of the year."
With no major economic data releases due this week, the rand is set to remain at the mercy of global sentiment, likely remaining in a narrow range with the sub-16.00 level the next target for rand bulls, traders said.
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