Rand at 20-month high

Biggest driver behind the current rally is an interest rate cutting cycle in the US.

- Liesl Peyper Moneywe

For the past week, the rand has been at a 20-month high against the dollar.

The question is how much further it will strengthen - and how long the rally will last.

Johann Els, group chief economist at Old Mutual, believes the rand could break through the R15 to the dollar ceiling in the next three to six months.

On Thursday evening, the rand traded at R17.16 against the dollar up 0.42% from the previous day.

"The biggest driver of a firmer rand at present is an interest rate cutting cycle from the US, which favours a stronger rand," Els says, adding that rate cuts in the US will be deeper than the cuts in South Africa.

On 18 September, the US Federal Reserve cut the fed funds rate by 50 basis points, while the South African Reserve Bank (Sarb) lowered interest rates by 25 basis points a day later.

Johan Gouws from PPS Wealth Advisory tells Moneyweb the difference between SA's interest rate and that of the US is 3.17%, up from 2.92%.