Rand has been the largest recipient of the gift of new markets to the Federal Reserve Chairman Jerome Powell, but one technical indicator suggests that South African exchange rate is exaggerated.
The dollar's 14-day relative strength ratio, compared to the dates that were first dipped below 30 on Thursday, is a sign for some traders that "green" is too far, too fast for a South African partner.
In January, the South African currency strengthened by 7.4% against the dollar, driven by a stranger Federal Reserve. This benefit is not only the best start in the year since Bloomberg started tracking data in 1998, but also this month is the highest currency in the world.
Although the overall risk environment has improved, the factors that have influenced the new market assets in recent months, including the US-China trading war, have not gone away, said Nema Ramkhanawan-Bhana, Johannesburg's FirstRand Bank.
"Two-way risk is great, especially when domestic factors are thrown into the mixture," she said in a customer note. "The beach is also very far, very fast, so we wouldn't be surprised at the small retracement."
The match reached 0.3% to $ 13.3846 at 13:40 in Johannesburg after 2% on Wednesday.