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The rand trades at its best level so far this year

by , 09 April 2014

The rand continues to strengthen after ending last week at a three month high. It has finally broken through R10.50 to the dollar. The weaker greenback is helping the rand out. The rand, along with other emerging market currencies, have rallied this week. Let's take a closer look at the rand…

The rand gained over 1% against the greenback

Yesterday, the rand rallied “over 1% against the dollar,” reports Fin24. This follows a stronger euro and a weaker dollar. The weaker dollar has helped emerging market currencies strengthen.

The rand hit 10.4386 to the dollar last night, reports Bloomberg. That’s the currency’s best level since 30 December.

The rand also benefited from foreign investors buying “South African bonds for a third day,” says IOL. This is “the longest stretch in two weeks”.

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The dollar is under pressure as investors wait for the release of the latest minutes from the US Federal Reserve’s committee meeting tomorrow, notes BDLive. The minutes are likely to give more clues about further tapering of its stimulus programme.

The rand’s rally saw it break through the resistance level of R10.50 to the dollar, adds Fin24.

So is the rand going to keep strengthening?

Analysts at Absa Capital believe the outcome of tomorrow’s Fed’s minutes will give the rand “further direction,” says BDLive. The rand is “heavily dependent on the expected path of US monetary policy”.

But some analysts believe today’s gains are just the start of the rand fighting back.

Neil Irving at 4Cast says that with the sharp break seen today, there could be “more dollar weakness,” reports Fin24. Mr Irving says the rand’s “next targets are at 10.41 then 10.3615”.

With the Fed minutes due for release tomorrow afternoon, we’ll have to wait and see the reaction of the rand.

The rand trades at its best level so far this year
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