Johannesburg - The rand was off its best level by midday on Wednesday as the euro gave up some its gains against the dollar and world equity markets turned lower as economic worries returned to the spotlight now that the US election has been decided.
At 12:15 the rand was bid at R9.7849 to the dollar from a previous close of R9.6998 and off earlier levels of near R9.65.It was bid at R12.5594 to the euro from a previous R12.6121 and at R15.4658 against sterling from R15.4590 before.
The euro was bid at $1.2839 from $1.2993 overnight, while gold was quoted at $754.87 a troy ounce from $762.90/oz overnight.
Asian markets were buoyed by Democrat Barack Obama's decisive victory in the US presidential election, but some cautioned that reality may soon set in on the difficult task ahead to kick-start the economy, Dow Jones Newswires reported. Several markets were off their early highs, partly because an Obama
win had been somewhat priced in by the large gains in global share markets in recent days.
However, European shares have turned negative, with the FTSE100 last down 2.9% and at home the JSE was off 1.9%. US stocks are expected to open sharply lower as investors consolidate gains now that the US election is over.
Earlier a local currency trader said the rand needed to break below R9.50 to move dramatically stronger. Much would depend on interest rate decisions by the European Central Bank and Bank of England on Thursday, he added.
Euphoric post-result buying
The trader pegged the rand in a R9.50 to R9.80 range for today.
RMB analysts said in their morning commentary that the expectation that the Democrats will gain control over both houses of Congress has also raised hopes that much needed financial, economic and health sector reforms can be executed
expediently.
"With the dollar now gaining ground once again in what some have termed euphoric post-result buying we see USD/ZAR somewhat weaker trading within a R9.50 - R10.05 range today," RMB said.
Dow Jones Newswires reports that Barack Obama's election as the next US president had little impact on the dollar in Asia on Wednesday, with the US currency falling slightly against the yen on profit-taking after the previous session's gains.
Traders said an Obama victory had largely been factored into trading, and that also contributed to the profit-taking when the results came out. The market is still looking mostly at developments in the global financial crisis to figure out what currency positions to take.
Traders said the dollar's outlook will depend on what happens in global stock markets, with a strengthening in the US currency expected if global share markets rise and cause a decrease in investors' risk aversion.
The euro, meanwhile, dropped against the dollar and the yen. Some Japanese investors were said to be selling the common unit in a thin market, traders said.
Dealers said the euro could fall further ahead of the European Central Bank's monetary policy meeting on Thursday, at which the central bank is expected to cut rates by 50 basis points.
- I-Net Bridge