The rand was trading at its highest level in over a year against the pound on Tuesday, as Turkey’s failed coup saw global markets bounce back from their risk-induced levels.
The rand was 1% stronger at R14.25 against the dollar on Tuesday at 08:30. It was 1.1% stronger at R18.85 to the pound and 0.85% stronger at R15.79 to the euro.
This level against the pound was last seen in early June 2015, said Umkhulu Consulting’s Adam Phillips on Tuesday.
Phillips said he was “surprised the markets were so bullish on emerging market currencies because there were quite a few fatalities and a vast number of military and judicial officials that were rounded up by the government”.
“The ‘risk on’ that we saw yesterday still looked tired and if one looks at local bonds they again lost some ground,” he said. “As yet there seems to be no effect on the rand.”
“I think a great deal of realignment has happened internationally and we have started to see yen positions being unwound as equities move up as a fear of rate hikes recedes,” he said.
Global markets have bounced back from the risk-off that was inspired by the failed coup in Turkey last Friday, said RMB analyst Isaah Mhlanga on Tuesday.
“It is as if nothing happened or markets are just getting numb to political risk that’s inspired by anti-establishment politics,” he said.
“The rand follows global sentiment,” he said. “It lacks direction as it waits for tomorrow’s CPI release and the Sarb (interest rate announcement) on Thursday. There is, however, potential for some gains but it’s just potential given the lack of major market-moving events.”