Rand hits 12-month low to the dollar as risk appetite sours
The rand hit an intra-day worst of R14.4189 to the dollar in risk-off trade‚ even weaker than the levels it reached in the aftermath of the disappointing medium-term budget policy statement (MTBPS).
Risk appetite on global markets diminished on Friday‚ after the Senate bill on US tax reform released on Thursday differed markedly from the House bill. This implied that reconciling the versions would be time consuming and‚ under the Senate bill‚ the corporate tax cuts would only kick in on January 1 2019‚ said Rand Merchant Bank currency strategist John Cairns.
Locally‚ investors are eyeing an ANC national executive council meeting‚ while speculation has increased that the government will soon announce a plan for free tertiary education. If markets fixated on the rumour‚ further rand weakness would ensue‚ as investors positioned themselves for a blowout‚ said TreasuryOne dealer Andre Botha.
Markets were also processing comments made in New York on Thursday by Reserve Bank governor Lesetja Kganyago‚ where he reiterated warnings about the government’s overspending‚ particularly as it related to the solvency of state-owned-enterprises. Kganyago said the Bank would attempt to offer supportive monetary policy‚ bu‚ this would not solve SA’s structural issues.
At 3pm‚ the rand was R14.3827 to the dollar from R14.2548‚ at R16.7557 to the euro from R16.596‚ and at R18.9562 to the pound from R18.7435.
The euro was at $1.165 from $1.1642. — Business Day