JOHANNESBURG – The rand rallied as markets again positioned for a Biden presidency amid a tumultuous United States electoral race.
While hopes for a Blue wave failed to materialise – adding constraints to the passing and implementation of Biden’s fiscal stimulus plans – markets anticipate a Biden-Harris victory in the very tight race.
The rand is set to firm should Biden take US office, as the fiscal stimulus plan (widening the budget deficit) will not only weaken the dollar and raises prospects for higher US imports (weakening the current account), but expectations are that a less erratic president will dampen safe-haven appeal of the greenback.
We continue to expect a correction in the dollar from overvalued levels while additional policy stimulus feeds into the softening greenback narrative. In addition, the rand’s carry appeal should become more attractive as investors demand a higher interest rate premium than offered by the US.
At the close of local trade, the rand quoted at R15.88/$ and has since then strengthened further, teetering on the R15.7/$ threshold this morning.
South African bourse
The JSE All Share (+2.92 percent) gained considerable ground yesterday with gains across the board, particularly the technology (+6.15 percent), gold (+4.53 percent), and industrials (+3.9 percent) sub-indices. In the overall emerging market sphere, the MSCI Emerging Market Index traded flat after gaining the previous session.
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