Rand hits strongest level this year, 'could still breach 18/$'

The rand strengthened to a five-month high on Thursday (16 May), trading at the R18.20 mark to the dollar.

The currency's rally has been attributed to renewed optimism off the back of the latest inflation data, that the US is ready to lower interest rates.

Market analysts said the release of more benign US inflation data late on Wednesday, had seemingly overshadowed concerns about the fact that our NHI Bill had been signed into law.

The JSE also seemed to be shrugging off any pre-election jitters as 29 May comes ever closer.

Bruce Whitfield interviews Andre Cilliers, currency risk strategist atTreasury ONE, whose earlier prediction of a reprieve for the rand seems to be realising.

Aside from the latest numbers out of the US continuing to point towards the Federal Reserve acting sooner on interest rate cuts, Cilliers is also upbeat about South Africa's election outlook and the consequences for the economy.

"I do not think we're in for a 'doomsday' result, and this will also contribute positively because of what that will do to the market."

"If results points to stability within economic policy, with not too many changes because of bad coalitions or anything... That is something that investors are always looking at."

Andre Cilliers, Currency Risk Strategist - TreasuryONE

This scenario would also underpin a continued move of the rand lower, Cilliers points out.

"I think a break of the 18s is quite possible in the weeks ahead, and we might see R17.80 or R17.90 to the dollar."

Andre Cilliers, Currency Risk Strategist - TreasuryONE