The rand firmed to the strongest level in almost four weeks on Wednesday, gaining for the fifth consecutive session after the government said would consider moving a Brics summit out of the country.
The unit currency briefly strengthened to below R19/$ as “the geopolitical risk premium surrounding SA Inc seems to be unwinding, allowing the rand to retreat from its massively oversold position”, RMB analysts said in a note.
Business Day reported earlier that the cabinet is to consider a recommendation to move the annual Brics summit to China. That follows a legal opinion by a technical team appointed by President Cyril Ramaphosa to look into the legal implications of hosting Russian President Vladimir Putin who is under an arrest warrant from the International Criminal Court (ICC).
According to people familiar with the matter, SA is also considering co-chairing this year’s annual Brics summit with China, a move that would solve the political conundrum. SA is a signatory to the Rome Statute which established the ICC and would be obliged to arrest Putin should he arrive in the country.
SA’s perceived alignment with Russia has roiled markets, sending the rand to its weakest levels ever and leading to fears of sanctions from major trading partners.
“A possible solution to the government's Putin arrest conundrum, as well as improving power supply and a pickup in investor sentiment has seen the rand hold on to gains made over the past few days,” said TreasuryONE currency strategist Andre Cilliers.
At 5.59pm, the rand had strengthened 0.57% to R19.0942/$ — after an intraday best of R18.9712/$. It had also appreciated 0.45% to R20.4324/€ and 0.31% to R23.7688/£. The euro was little changed at $1.07.
“Also supporting the rand is the recent weakness in US data, and easing concerns that the US Federal Reserve will need to remain overly hawkish,” the RMB analysts said.
The rand has gained 3% in the past week, but is still down 12% this year. The JSE all share ended the day 0.37% firmer at 77,125 points and the top 40 0.28%.
Globally, markets are mixed as investors await fresh news for direction.
“The Fed’s policy-setting board meets next week, though, so that could make things more interesting,” said Oanda senior market analyst Craig Erlam.
At 6.41pm, the Dow Jones industrial average was 0.24% firmer at 33,654.33 points, while markets in Europe were slightly weaker.
Gold lost 0.86% to $1,946.01/oz and platinum 1.22% to $1,021.70/oz. Brent crude was 1.56% firmer at $77.27 a barrel.
With Thando Maeko
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