The Cost of Shorting South Africa’s Rand Is Higher Than Ever
- Basis-swap spread climbs as cost of shorting rand increases
- Portfolio and trade flows adding support for currency
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Bet against the rand at your peril.
The one-year rand-dollar basis-swap spread, which reflects the cost of borrowing the South African currency in the local market to buy greenbacks, climbed to a record 104 basis points this week. That suggests banks are flush with dollars following large inflows from sovereign loans and corporate deals, while a decline in imports reduced demand for the U.S. currency.