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Rand at one-week low vs dollar

Feb 11 2011 09:33 Reuters

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Johannesburg - The rand fell to a one-week low against the dollar on Friday due to continued central bank dollar-buying, although traders said intervention levels were lower than previous weeks.

The rand has weakened 10% against the dollar this year as the South African Reserve Bank (Sarb) has stepped in to try and keep it in check after a sharp appreciation in December.

At 06:42 GMT the rand traded at R7.2975 to the dollar, 0.27% weaker than its Thursday close of R7.2775. It briefly touched R7.30, its lowest since February 4.

"For now, dollar/rand remains safely in the R7.17 to R7.30 range but risks have switched back to the upside," Rand Merchant Bank said in a note. The rand is one of the worst performing currencies so far this year.

"Global events have played a role, but we believe that the leading drivers of this weakening trend are South African-driven," Jeff Gable of Absa Capital said after moving his year-end forecast to R7.60 from R7.10.

"Following December's sharp appreciation it has experienced a world-leading sell-off thus far in 2011," Absa Capital said.

The easing of exchange controls for South Africans and the central bank's "increasingly aggressive intervention" were the main factors driving the weakness, Absa said.

Government bonds traded slightly lower than their closing levels on Thursday. The yield on the 2015 issue rose 0.5 basis points to 7.865% and that on the 2026 paper R186 was up by the same margin to 8.715%.
sarb  |  dollar  |  markets  |  bonds  |  rand
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