A recovery in commodity currencies and stability in the oil price boosted the rand to its highest level in four months on Tuesday.

By 09:00 on Tuesday, the rand was trading at R14.38/$, which was last seen on December 6 – three days before President Jacob Zuma fired the respected Finance Minister Nhlanhla Nene, which sent the rand and markets tumbling to historic lows.

Umkhulu Consulting’s Adam Phillips said in a note on Tuesday that the recovery in the oil price was a “key driver” in helping commodity currencies appreciate.

“The rand’s ability to rally yet again says a lot,” said Rand Merchant Bank analyst John Cairns on Tuesday in a note.

“The market has hit repeated hurdles in the past few weeks but, after first faltering, has managed to keep surging. This resilience has surprised even us aggressive long-term rand bulls.”

He said the disappointment from the failed oil meeting did not last long.

“Brent has led the charge, bouncing back to $43/bbl,” he said. “Wall Street has rallied to within 2% of its all-time high. Risk currencies have surged, notably the aussie and kiwi, which have pushed to their best levels in ten months.”

Rand can only be hit by politics - for now

Phillips said that, in the short term, emerging market and commodity currencies “look set to continue performing”.

“I think in South Africa, one has to build in at least 75 cents for the political situation,” he said. “Therefore, in the short term, somewhere between R14/$ and R14.50/$ appears to be the medium term range, although we have to expect overshooting.”

Phillips said he disagrees with economists who believe a ratings downgrade – which could be announced as early as June – could send the currency plummeting to R17/$. “I am not quite so drastic in my stance here,” he said.

Rand Merchant Bank analyst Gordon Kerr said Treasury will be looking to issue the following bonds on Tuesday morning: R2 030 (R650m), R2 037 (R850m) and R2 048 (R850m).

“The auction will see the introduction of a long-end stock, which was missing from last week’s strong auction,” he said.

“We expect a good performance, with all bonds clearing at or through mark-to-market. We expect the R2 030 to be the best performing stock.”