News Column

Rand rallies on upbeat HSBC forecast

February 7, 2014

The rand may gain to about R10.40 a dollar by the end of the year, David Bloom, the global head of currency strategy at HSBC, said in an interview with Bloomberg Television'sGuy Johnson in Cape Town.

A credit rating upgrade for Mexico bolstered confidence in developing nations, which are stabilising after central banks in South Africa, Turkey and India raised interest rates to halt declines in their currencies.

"Eventually volatility is going to come down, and those interest rates are going to look juicy," Bloom said. "The carry starts looking attractive," he said, referring to the rate of interest earned from securities less the cost of funds borrowed to purchase them.

The rand advanced as much as 1.4 percent to R10.9818 per dollar, the strongest intraday level since last week, and was bid at R11.0997 at 5pm yesterday, 3.28c firmer than Wednesday's bid of the same time. Yields on benchmark rand bonds due December 2026 fell.

The rand stayed stronger after the European Central Bank left interest rates unchanged and refrained from adding stimulus. At least 18 of the 24 emerging market currencies gained against the dollar yesterday.

Pretoria News

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Source: Pretoria News (South Africa)

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