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World markets have been enjoying a bit of a relief rally after US President Donald Trump pulled back on new European tariffs amid tensions over future of Greenland.
The rand closed at its strongest level in almost four years on Wednesday, at R16.26 per dollar, after Trump said in his speech at the World Economic Forum (WEF) in Davos, Switzerland, he would not use force to annex Greenland. The last time the rand closed lower was in June 2022.
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The rand strengthened even further on Thursday morning, reaching R16.13 by 11:00 briefly. By 14:30 it had returned to about R16.23 per dollar.
Trump’s announcement followed a meeting with North Atlantic Treaty Organisation (NATO) chief Mark Rutte, and led to an immediate surge on stock markets. American indexes of top companies like the S&P 500 rose 1.1% on Wednesday, and most Asian indexes rose somewhat on Thursday. The JSE’s all-share index was also up in early morning trade, and by 15:30 the index had won 0.8% for the day.
On the downside for SA consumers, oil prices increased, closing above $65 per barrel on Wednesday. By 14:30 on Thursday, it had fallen back closer to $64.
The gold price closed at a record of $4 829.23 per ounce, but retreated to $4 766.40 per ounce overnight. By 14:30 on Thursday morning, a new closing price was a very real possibility as gold traded at $4 831.34 per ounce.
Bianca Botes, director at Citadel Global, says the higher oil price and gold’s continued run reflect “the lingering geopolitical and policy uncertainty”, even as a higher risk appetite supported emerging-market currencies like the rand. A higher gold price can support the rand, as the precious metal is a key source of SA’s foreign exchange earnings.
Nedbank analysts are predicting a trading range of between R16.05 and R16.40 on Thursday, and are of the view that if the rand could break R16.20, it “appears inevitable” that a level of R16 per dollar might be approached in the short term.
The article is updated regularly to reflect market movements.
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