South Africa’s Rand Holds Firm Amidst Grim Global Outlook

South Africa’s rand held on to its gains in early trade on Thursday amid grim forecasts for the global economy as both the U.S. and Eurozone Central Banks kept a firm dovish stance, pushing the dollar near two-week lows. The rand had strengthened by 0.32 percent to 13.8775 to the dollar compared to its close in New York on Wednesday of 13.9225.

“The Rand finally broke below the R14.00 level on the back of international yield-seeking behaviour as both the U.S. and Eurozone Central Banks kept a firm dovish stance,” Andre Botha, Senior Dealer at TreasuryONE said in a note. The last time the rand had traded below the 14.00 threshold was on Feb 27.

The U.S. dollar lacked momentum, with its index against six other currencies hovering near a two-week low, as the minutes from the Federal Reserve’s last meeting cemented its recent dovish policy stance with no change to rates expected this year. While the European Central Bank left its ultra-easy stance unchanged as expected and the bank’s President Mario Draghi noted that economic data was weak.

“For now, at least, the sentiment is in the Rand’s favour and we could see the Rand breaking a little lower but gains could be a little bit harder to achieve,” Botha added.