The rand was on slippery slope on Tuesday morning, partly due to a broad-based recovery in the dollar, which has been volatile since the start of the year.
The erratic price action in the dollar came despite markets expecting at least three increases in US interest rates by the end of the year.
“Could this dollar recovery be the real deal? Moves over recent days have been limited and there have been numerous other short-lived bounces against the great dollar bear market that began in 2017,” Rant Merchant Bank currency strategist John Cairns said in an e-mailed note.
But the rand was also vulnerable to short-term pullbacks, following its relentless run since December when the ANC chose Cyril Ramaphosa as its new leader.
The stronger rand helps keep inflation in check, although exporters stand to lose if it strengthens progressively.
The tabling of the budget on Wednesday could provide a short-term catalyst for the rand.
Analysts say the budget will provide a reality check and could test the wave of market optimism, which followed the election of Ramaphosa as president.
Finance Minister Malusi Gigaba could announce increases in personal income taxes and value added tax (VAT) to attempt to plug the budget hole, which is estimated at R50.8bn.
At 9.50am, the rand was at R11.7449 to the dollar from R11.6722, at R14.5184 to the euro from R14.4824, and at R16.3794 to the pound from R16.3405.
The euro was at $1.2362, from $1.24.07. – BusinessLive