By around 10am this morning, the rand had strengthened by 1,7% to R14,96 to the dollar following a cautionary note from US Federal Reserve chairperson Janet Yellen on Tuesday night, Fin24 reports.
Yellen reiterated the Fed’s stance that it would be cutting back on interest rate hikes for the year, driving gains among most global currencies.
Yellen did, however, warn that it was “too early to tell if this recent faster pace [of core inflation] will prove durable”.
“The chances of a hike in the US before the first [half] of 2016 has dropped to below 25% now. US Treasury 10Y yields also dropped below 1,8% overnight. This has caused the dollar/rand to gain some momentum,” Treasury One was quoted saying.
Rand Merchant Bank currency strategist John Cairns said Yellen’s “dovish” comments had “given back all the gains it ground last week”.
Bloomberg reports that the rand’s slow recovery by 3,4% in the quarter – following the aftermath of President Jacob Zuma’s economically damaging decision to fire former Finance Minister Nhlanhla Nene and replace him with back-bencher MP David ‘Des’ van Rooyen – was the first three-month gain the rand has seen against the dollar since March 2012.