The rand is having one of the best weeks in recent memory and continued to extend its rally on Thursday morning against the dollar and other global currencies.
According to Reuters analysts, the ZAR has strengthened to a 20-month high against the dollar and was trading at around R17.19 against the dollar at 7:50am.
The rand was trading around R19.16 to the euro and R22.95 to the pound.
The strength the rand has shown over the last few weeks has yet to be seen since February 2023 and could be attributed to interest rate cuts by the South African Reserve Bank (SARB) and US Federal Reserve last week.
Will this continued rally continue?
Kavir Surujhlal, a sales trader at IG Group told Reuters on Wednesday that the rand’s strength may continue and hit the R17 mark.
"The momentum is likely to continue in favour of our local currency with there being little resistance until the R17/$ psychological level," Surujhlal added.
Andre Cilliers, currency strategist at TreasuryONE said earlier this week that the rand will remain below the R18 mark this week.
“The rand is likely to remain within a R17.40 to R17.70 range in the short term as it tracks international moves but we could see further profit-taking, given the rand's recent strong run,” Cilliers noted.
New records
On Wednesday, the rand hit an intra-day high of R17.12 against the dollar.
Cilliers argued that this continued positive sentiment toward the rand has been generated by investor sentiment in the formation and continued success of the Government of National Unity (GNU).
There have also been calls by President Cyril Ramaphosa for more foreign investment in South Africa.
Ramaphosa told US businesses that he would like them to deepen their investment ties with South Africa.
The president made these comments while speaking at the South Africa-United States Interactive Business Forum in New York this week.
Ramaphosa made it clear that South Africa is on a trajectory of economic recovery and structural reform.
He argued that the coalition government is open to major opportunities available to foreign investors.
“The advent of the Government of National Unity has renewed investor optimism in the South African economy. The message I bring to US investors is that this optimism is well-placed,” he said.
“South Africa is firmly on the road to recovery, and we invite you to be part of this journey. Investments in South Africa are secure. Our business environment is stable. This is supported by policy certainty and regulatory safeguards,” Ramaphosa added.
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