The appreciative bias in the rand was maintained throughout last week, with the currency presently at 11.55/USD compared to 11.67/USD last Monday. Last week, the rand’s performance was influenced by the 2018 Budget which reflected efforts of fiscal consolidation following the fiscal deterioration presented in the Medium Term Budget Policy Statement in October 2017. Consequently, a lower possibility of a credit rating downgrade by Moody’s is being priced, as reflected in the narrowing of SA’s credit default swap (CDS) spread to 144bp presently from levels around 200bp prior to the ANC elective conference in December. SA’s CDS has also moved below those of Brazil and Turley, both of which are rated non-investment grade. In the year to date, the rand is the best performer amongst 24 emerging market currency, having appreciated by 7.11%.

This week ahead, the rand could be further influenced by domestic political developments pertaining to the possible announcement of a Cabinet reshuffle.

In the week ahead, the rand is expected to trade in a range of R11.10/USD – R12.10/USD, R13.80/EUR - R14.80/EUR and R15.70/GBP - R16.70/GBP.