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This news, coupled with Lawrence Summers withdrawing his bid to become Federal Reserve chairman earlier this week, has investors happy with a ‘risk on’ scenario at present. It is thought that Mr Summers would tighten Fed policy more than that of Janet Yellen, his main rival and likely successor to replace current chairman Ben Bernanke.
The US dollar has now weakened with less ‘safe-haven’ demand, and this has helped bolster the rand by 2.84% this week. It is now trading below the key support level of R9.80 to the dollar. The next significant level for traders is on long-term support at R9.48.