Rand and EM currencies strengthen

Johannesburg - The South African rand picked up some speed during the afternoon on Wednesday in line with other emerging market currencies around the world.

At 16:05 the rand was bid at R9.6698 to the dollar from a previous close of R9.6998 and off worst levels of R9.8190. It was bid at R12.4782 to the euro from a previous R12.6121 and at R15.4938 against sterling from R15.4590 before.

The euro was bid at $1.2904 from $1.2993 overnight, while gold was quoted at $753.88 a troy ounce from $762.90/oz overnight.

"All emerging markets have done well this afternoon and the rand followed that. I think they like the Obama victory," said a local currency dealer.

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.

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.

"The rand has recovered after coming off last night," concluded the local currency dealer.

Dow Jones Newswires says that the dollar is stronger against the euro early on Wednesday in New York after global stock markets declined overnight, causing risk appetite that had returned a day earlier to disappear again.

The US currency showed little reaction to a report out early on Wednesday that showed private sector jobs fell 157 000 in the US in October. The data came from payroll processors Automatic Data Processing (ADP) and consultants Macroeconomic Advisers.

Obama's victory in the presidential elections failed to rally markets, with European stocks trading lower and US stocks pointed toward a lower opening.

This has caused flight-to-quality moves into the US currency to return, allowing the greenback to regain some of Tuesday's losses, though it remains in rather tight ranges.

Analysts said the moves on Wednesday, both in equities and the dollar, might have had less to do with election result itself, which was largely expected, and may be more due to a correction from Tuesday's big gains in equities.

- I-Net Bridge