The rate has risen to levels not seen in more than six years to bring South African currency back into emerging-market currency winners.
The rand ended its worst weekly loss since April 2020, with developing countries posting just seven of their currencies to post gains against the dollar this year. The South African Reserve raised its borrowing costs by 50 basis points to 4.75% on Thursday, indicating that it is heading for a steep rate hike.
China’s latest measures to strengthen its economy could also support random gains, as the country is South Africa’s largest buyer of raw materials.
Currency forecasts compiled by Bloomberg saw the dollar average R15.90 per dollar in the second quarter, compared to Friday’s spot level of around R15.85. The forecast rose from R14.81 a month ago amid concerns that the Federal Reserve’s austerity measures would erode Rand’s yield advantage over the greenback.
Investors in the futures market have remained bullish on the currency despite the risk-free attitude of the past one month. Traders still hold historically high net-long positions, meaning that bets on rand gains against the dollar outweigh bets on falls, according to Commodity Futures Trading Commission data.
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