The rand was firmer against the dollar on Monday afternoon‚ despite the latter firming against the euro following German chancellor Angela Merkel’s announcement that she would resign as Christian Democratic Union of Germany (CDU) leader.
However‚ Merkel will stay on as chancellor until 2021‚ “when she will not seek re-election”.
The rand usually tracks the euro‚ but the local currency has become so oversold that it showed little reaction to its weakness on Monday.
FXTM analyst Jameel Ahmad said Merkel’s announcement was not the type of news that is expected to have macro-economic implications. “But it could impact the euro and we have seen the trend in the past where the rand can follow the trajectory of the EU currency.”
Earlier‚ the euro weakened to a two-month low after Merkel’s beleaguered government faced a leadership crisis following an election in the state of Hesse‚ in which the coalition partners suffered substantial losses.