Rand dips below R17/$ on the back of weaker greenback, current account surplus
The rand strengthened on Wednesday amid increased appetite for risk among investors and the county’s first current account surplus in 17 years.
South Africa’s trade balance more than doubled in the first quarter, with the current account swinging to a surplus of 1.3% of gross domestic product, or R69.7 billion.
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The rand reached R16.89 in the morning as the US dollar eased overnight.
This is in stark contrast to April, when the rand slumped to record lows of R19,35 to the dollar.
Econometrix economist Azar Jammine says a weaker dollar is a good sign for developing countries.
“The dollar itself is quite weak because internationally investors are moving towards taking more risks and therefore have less reason to invest in the dollar.
“South Africa’s current account moved into a surplus for the first time in a number of decades, in fact since 2003, and that means a reduced dependence on foreign capital inflows and that gave a boost to the South African currency.”
Efficient Group economist Francois Stofberg believes there is growing international appetite for the rand.
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