© Reuters. South Africa’s Rand Rebound is the Gathering Momentum
The edge comeback seems to be gaining momentum.
It advanced a third day on Wednesday to its strongest level in five weeks, violating two key resistance levels that stood between it and further gains.
The cross between the dollar and the rand plunged below the 50-day moving average of 18.1507 for the first time this year. It also breached the 23.6% Fibonacci retracement from April’s record-low level of 18,044, which could establish a leap to the 38.2% retracement line of 17,235.
Without local news to drive the market, traders look for Thursday’s South African Reserve Bank interest rate decision. The Monetary Policy Committee expects the benchmark interest rate to fall for the fourth time this year as it seeks to support an economy that can contract up to 16.1%.
“I suppose you would say no news is good news” for the brink, said Cristian Maggio, head of new market research at TD Securities in London. “There has been no major announcement or event in a while and the market may have come to the conclusion that the rand is undervalued compared to other European currencies.”
Rand, Wednesday’s best new market maker, rose as much as 2% to 17.9743 per share. Dollar at 1:22 p.m. in Johannesburg. It offset the currency decline this year to 22%, still the second worst result after Brazil’s real.
(Updates with analyst comments by chart.)
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