The rand strengthened on Monday as easing tensions between the United States and Iran, combined with a weaker US dollar, boosted investor sentiment following last week's surprise Sarb interest rate decision.
The South African rand strengthened at the start of the week as easing geopolitical tensions in the Middle East and a weaker US dollar helped markets recover from last week's volatility following the South African Reserve Bank's (Sarb) decision to leave interest rates unchanged.
After briefly weakening to R16.98 against the US dollar on Friday as investors reacted to the Monetary Policy Committee's unexpected decision to keep the repo rate at 7%, the local currency recovered to around R16.70 on Monday morning.
Investec chief economist Annabel Bishop said the sell off was largely driven by markets unwinding expectations of a rate increase.
"The rand reached R16.98 per US dollar on Friday, jumping up towards R17.00 as markets factored out the expected 25 basis point hike from the MPC on Thursday which failed to materialise," Bishop said.
