Week Ahead: Trade balance to have remained in surplus in July on persistently subdued domestic consumption and investment activity
25 Aug 2017
The rand strengthened at the start of this week to 13.15/US$ versus Friday’s level of 13.27/US$, and has steadied at 13.16/US$ into the end of the week. The rand has derived support from a commodity price lift and some US$ weakness. Political concerns relating to the possibility of a government shutdown have weighed on the US$.
The continuation of broadly favourable financing conditions, coupled with the positive momentum in global growth and trade, has underpinned emerging market portfolio flows, particularly into bonds. Barring only a few emerging market currencies, like the Turkish lira, most have gained on a real trade-weighted basis. This currency strength has been a contributing factor to the either stable or decelerating inflation profiles in most emerging market countries, which in turn has allowed for more accommodative monetary policy stances.
The rand is expected to trade in a range of R13.65/USD – R12.65/USD, R16.00/EUR - R15.00/EUR and R17.40/GBP - R16.40/GBP.