{"id":56499,"date":"2021-04-16T00:47:28","date_gmt":"2021-04-16T07:47:28","guid":{"rendered":"https:\/\/drduru.com\/onetwentytwo\/?p=56499"},"modified":"2021-04-20T22:32:07","modified_gmt":"2021-04-21T05:32:07","slug":"south-african-rand-boosted-by-central-bank-confidence","status":"publish","type":"post","link":"https:\/\/drduru.com\/onetwentytwo\/2021\/04\/16\/south-african-rand-boosted-by-central-bank-confidence\/","title":{"rendered":"South African Rand Boosted By Central Bank Confidence"},"content":{"rendered":"\n

Last November, the South African rand (USD\/ZAR) finished reversing its pandemic related losses against the U.S. dollar. Along the way I pointed out the benefits of getting long the South African rand<\/a>. This week, USD\/ZAR dropped to levels last seen in January, 2020. The rand looks to strengthen further based on the confidence expressed by South Africa’s Reserve Bank Governor Lesetja Kganyago in a recent Reuters interview<\/a>.<\/p>\n\n\n\n

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The South African rand (USD\/ZAR) travelled a tremendous round-trip against the U.S. dollar. Source: TradingView.com<\/a><\/em><\/strong><\/figcaption><\/figure><\/div>\n\n\n\n

In the interview, Kganyago expressed confidence that investors will remain interested in buying high-yielding South African bonds even as monetary policies start to normalize (higher rates) around the globe. Moreover, South Africa enjoys a real rate advantage over other emerging market countries given South Africa’s success in containing inflation. Higher bond yields attract capital inflows and boost the domestic currency.<\/p>\n\n\n\n

The following quote convinced me of Kganyago’s determination to contain inflation:<\/p>\n\n\n\n

“High inflation perpetuates inequality..Those who are rich can buy assets to protect themselves from inflation, they can buy shares and bonds and property. But those who are earning fixed incomes, whether a salary or a government social grant … if inflation erodes it you have to wait for the next increase.”<\/p><\/blockquote>\n\n\n\n