The USD/ZAR currency pair hovered above a 2 1/2-week low of 16.2596 on Thursday, as optimism the US and Iran may be moving closer to a peace deal boosted investor risk appetite.
Media reports stated that Washington and Tehran were working towards a one-page memorandum to put an end to the confrontation in the Gulf, while tricky issues such as Iran’s nuclear programme would be left for later.
The Rand also drew support from rising Gold prices. South Africa is a major producer and exporter of the yellow metal.
Meanwhile, oil prices dropped below $100 per barrel, easing concerns over elevated inflation globally.
Yet, Federal Reserve Bank of Chicago President Austan Goolsbee warned that US inflation had not continued to ease toward the central bank’s 2% objective.
Investors now braced for the key US Non-Farm Payrolls report, which may provide fresh clues on the Fed’s monetary policy path. Indications of a cooling labor market could revive the case for interest rate cuts.
“From a technical perspective, we could still see further strength in the rand, but this will depend on further progress toward a sustainable, peaceful solution in the Middle East,” Wichard Cilliers, head of market risk at TreasuryONE, was quoted as saying by Reuters.
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