The rand broke through the important R13.20/$ resistance level to the dollar in late afternoon trade on Tuesday, and stands poised to crack R13 if the strengthening trend continues.
The rand failed to consistently break through R13.20/$ on four occasions since August.
“The rand is firmly on the front foot for now and a break through R13 looks promising at this stage,” said TreasuryOne currency dealer John Moni.
He said the main driver was uncertainty in global developed markets.
“These include the looming presidential election in France, as well as the uncertainty created with the resignation of President Donald Trump’s national security advisor, Michael Flynn.”
At 3.40pm the rand was at R13.1055 against the dollar form R13.3351. It firmed to a 18-month best level of R13.07 in intraday trade.
The rand was at R13.9132 against the euro from R14.1319 and at R16.3531 against the British pound from R16.7046.
The euro was at $1.0616 from $1.0596.
The rand was also supported by a weaker dollar, which could not hold on to the firmer levels below $1.06 to the euro. It reached $1.0591 on Monday but slipped over $1.06 in late afternoon trade on Tuesday.
The emerging market strength in the currency markets came as investors awaited comments from US Federal Reserve chair Janet Yellen, who was scheduled to testify before the US congress later on Tuesday.
Yellen’s address to congress was expected to provide more information on the planned interest-rate increases in the US for the year ahead.
Other factors supporting the rand include somewhat of a reprieve in the dismal local unemployment data, with unemployment in the fourth quarter of 2016 improving to 26.5% from 27.1% in the third quarter.
“However, the unemployment rate was still higher when compared to the 24.5% in the fourth quarter of 2015,” Investec economist Kamilla Kaplan said.
By Maarten Mittner for www.businesslive.co.za