After months of under performance on global currency markets, the rand continues to strengthen on the back of a strong dollar and hope of a new political administration in South Africa.

It is the best performing emerging market currency on the Emerging Market Index at the moment, at around R11.93 cents the US dollar.

The rise in the rand began in December after the African National Congress (ANC) conference.

Before the ANC conference in December 2017, the rand was trading at around 13 rand 70 cents to the Dollar. It began to strengthen after the ANC conference reaching 12 rand 40 cents at the beginning of January.

The trend has continued unabated.

The external catalysts include the weakening of the US Dollar to a level not seen in three years or so, combined with a positive global economic outlook.

Expectations are that the rand will continue to strengthen even more in the coming months.

But the Rand is one of the most heavily traded currencies and is prone to volatility.

While the general expectation is further strengthening, the opposite could be the case depending on a range of as yet unknown global and domestic factors.

 

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