Rand could be set for reprieve, reading global inflation and interest rate signals

While some central banks have already announced interest rate cuts, others are still waiting to see if inflation really is under control.

At the same time, relative to some other currencies, the rand has been doing better.

What can we expect from our own SA Reserve Bank (SARB) amid these latest signals?

Bruce Whitfield gets some insight from Andre Cilliers, director and currency risk strategist at treasury outsourcing company TreasuryONE.

Cilliers notes that there is some money flowing into emerging markets.

"We have seen some interest in our own bond market as well, and foreigners are definitely involved."

Andre Cilliers, Currency Risk Strategist - TreasuryONE

Generally, there is a feeling that rates will decline, and of course all eyes will be on the direction that the US and its Federal Reserve takes.

"If we look at the figures coming out of the US in terms of individual jobless claims - higher today than expected, and last week the unemployment figure came out higher than expected... so it seems that on the employment side in America, things re changing a little bit."

Andre Cilliers, Currency Risk Strategist - TreasuryONE

"Also, if we look at the growth figures that came out for the first quarter, that was far below the expectation. So, that economy is definitely cooling down and that could certainly have an effect on inflation AND on what the Federal Reserve could do with interest rates."

Andre Cilliers, Currency Risk Strategist - TreasuryONE

Against this backdrop of an expected improvement in interest rates and a change around the world, the rand is possibly in for a bit of a reprieve, Cilliers ventures.

He believes we could see the currency moving lower, and closer to the R18 to the US dollar range.

"I do think that the rand could definitely have some reprieve... trading in a lower trading range. We've been in an R18.60, R19.20 range for quite some time, and we've broken out of that."

Andre Cilliers, Currency Risk Strategist - TreasuryONE

Cilliers says he also does not see a 'doomsday scenario' for South Africa coming out of the May 29 elections.