Central bank decisions influenced the performance of the rand this week. Heading into the US Federal Reserve announcement on Wednesday, the rand weakened by 1.3% against the US$. This was directionally in line with emerging market currencies and was linked to the appreciation in the US$ index.  The Fed confirmed it would begin normalising its balance sheet by reducing bond reinvestments and signalled another increase in interest rates in December. However, post Wednesday’s FOMC the US$ has pared back some of its gains which has been reflected in a recovery in emerging market currencies. Concurrently, the SARB left its policy rate unchanged on Thursday, in contrast to market expectations of a 25bp cut, which supported further rand strength. Overall, on a five day spot return basis the rand is flat, with a depreciation of 0.15% against the US$ versus last Friday’s levels.  

In the week ahead, the rand is expected to trade in a range of R13.70/USD – R12.70/USD, R16.30/EUR - R15.30/EUR and R18.40/GBP - R17.40/GBP.