TreasuryONE’s currency threat strategist Andre Cilliers has been concerned with the international substitute markets for just about four a protracted time. He may presumably well presumably possibly rely on one hand the vogue of cases he has been optimistic about South Africa’s ever-weakening currency. However a confluence of things is providing a mighty stimulant, with Cilliers having reworked (no longer much less than hasty) staunch into a rand bull. He reckons a extra surge to R14.50 against the US buck may presumably presumably also merely be on the cards.
Andre Cilliers on the technical diagnosis of the rand
The emphasis will not be any longer genuinely on searching for to predict the currency, nonetheless to check up on and manage the threat that comes along with being in markets, both importing or exporting, and to mitigate some of those risks. There are loads of products chances are you’ll presumably well presumably presumably also exhaust. We now indulge in got instant our exporters that at the same time as you look for it across the 15.30 and 15.40 phases – referring to the rand buck substitute rate – we indicate our exporters peer at covering one of the vital risks, especially for the instant time-frame, on fable of those rates may presumably presumably also merely no longer be there for a extraordinarily prolonged duration. You’re going to purchase we’ve spoken a pair of currency that traded in a 15.20 to 15.50 band and I’ve acknowledged loads of cases that if it breaks out of the 15.20 to the underside end, shall we take a look at the 50 phases against the rand, which is precisely what took blueprint. We’re essentially at these phases where we’re currently trading around 14.85. In between, we had the conflict and a currency that behaved very surprisingly on fable of most folk anticipated the rand to take pretty of a beating and weaken substantially at the originate of that conflict. We’re currently below the 15.00 stage, so it’s no longer doable this can fetch away of a range of the 14.85 to 15.20 phases at this stage. It appears to be firmly entrenched at those phases. We’re getting closer to technical phases again, where if it breaks decrease, shall we even inch down as low as 14.50.
On factors influencing the rand’s outperformance
We now indulge in got considered a gold tag reaching phases of two,070. We’ve had palladium up at 3,600, and platinum around 2,300. It has since attain down reasonably pretty, nonetheless at those phases, South Africa being a commodity nation, no doubt obtained pretty of a correct tick in that block. Secondly, at the same time as you peer at Russia and the South African trade figures with Russia, sure industries within the nation – the fruit industry, for instance – may presumably well presumably be a runt more exposed. However at the same time as you peer at the total trade of South Africa with Russia, then our trade with Russia and Ukraine are pretty small and they hold no longer seem to be our preferrred trading counterparts. In numerous words, by the exhaust of sanctions and a waft of items between the countries, shall we fetch pretty correct tick in that block. Geographically, we sit at the southern tip of Africa, which is reasonably a long way faraway from what happens in Europe, is again a correct tick. With all those runt correct ticks by the exhaust of trade and imports and exports, for that reason the rand performed better. Our yields are moreover restful pretty excessive compared with numerous emerging market countries. So, for a trade, chances are you’ll presumably well presumably presumably also say that we are a dinky fetch haven at the southern tip of Africa, on account of this truth the rand performed exceptionally effectively within the direction of this duration.
On the rand going forward
It is complex to define what [will happen going] forward. We’re seeing the oil tag performing badly again; unsuitable for consumers, factual for oil and oil drillers. I mediate the rationale is Europe announcing they may presumably well presumably also merely blueprint an embargo on the oil. There may presumably well presumably be a extra scarcity of oil on fable of no person else can import oil out of Russia. Going forward, now we indulge in to peer how end we fetch to talks between Ukraine and Russia on fable of that will affect how things [pan] out. However for the moment, I enact no longer foresee the rand will weaken and inch above the 15.10, 15.20 phases. We are succesful of reside within these ranges and now we indulge in to search the 14.80 stage reasonably closely. If that breaks below 14.80, shall we inch staunch into a range of 14.50 to 14.90 for reasonably some time. For the time being, the threat for me is to a stronger rand and no longer genuinely a weaker rand.
Study moreover:
- Weird and wonderful nonetheless factual – Ukraine War is boosting the Rand. Here’s why – Andre Cilliers
- TreasuryOne’s Andre Cilliers is bullish on the Rand – here’s why
- Forex expert Andre Cilliers on the crimson hot Rand – where to from here?
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