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Cape Town – The rand strengthened more than 1.3 percent against the US dollar yesterday, moving below the R13.30-level against the greenback.

By 1300hrs the local unit was trading at R13.29/$ from its previous close of R13.47. It strengthened to R13.28 earlier in the session as emerging markets currencies gained back lost ground.

“Last week’s geopolitically-driven ‘risk-off’ move in markets showed some signs of stabilising on Friday, perhaps helped by US CPI that came out worse that expected. This supports the market’s view of a ‘lower-for-longer’ Fed on interest rates,” said TreasuryOne in a note to clients.

The rand was also buoyed by Moodys decision on Friday not release a credit view on South Africa, stating that nothing material has changed since they downgraded South Africa in June.

TreasuryOne said for now the market seems stable and it expects that emerging market currencies like the ZAR can gain back some of the ground lost over the past week or so.

“We however need to watch the political risk in South Africa, with the ANC top 6 to meet and the mention of a possible Cabinet reshuffle, again, on the cards.” — Fin24