Rand holds firm against the US dollar as commodity prices rise

The rand held on to gains against the dollar early on Thursday as a rise in commodity prices, especially in precious metals, benefits the resource-rich country. Photo: Siphiwe Sibeko/Reuters

The rand held on to gains against the dollar early on Thursday as a rise in commodity prices, especially in precious metals, benefits the resource-rich country. Photo: Siphiwe Sibeko/Reuters

Published Mar 17, 2022

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The rand held on to gains against the dollar early on Thursday as a rise in commodity prices, especially in precious metals, benefits the resource-rich country.

At 0645 GMT, the rand traded at 14.9200 against the dollar, not far off its close on Wednesday when it touched a four-month high of 14.9003.

"The grind lower continues but the money flowing into South Africa via dis-investment from Russia/Turkey should eventually flow back once all of this mess resolves itself. However, by the same token, I am still very bullish on commodities," Warrick Butler, chief trader at Standard Bank, wrote in a note.

"With the supply chain issues globally and the way the domestic economy is set up, the rand should still benefit from the terms of trade."

Even though the rand is considered a riskier asset, it has gained favour in recent weeks as higher prices of precious metals such as gold and palladium have boosted prospects of stronger export income for the country.

Gold and palladium prices gained on Thursday as the dollar weakened following an expected interest rate hikes by the US Federal Reserve.

Hopes for more stimulus in China and progress in peace talks between Ukraine and Russia also lifted sentiment for emerging markets.

In fixed income, the yield on the benchmark 2030 government bond was down 9.5 basis points, to 9.53 percent, reflecting firmer prices.

REUTERS

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