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Rand expected to weaken further

Dec 03 2012 09:15
Reuters

Johannesburg - The rand could struggle to regain its strength in the days ahead as the country's weak fundamentals offset an anticipated end-of-year boost to the currency.

The rand was at R8.900 to the dollar at 06:48 GMT on Monday, barely changed from Friday's New York close.

The currency looked set to trade in a range of between R8.75 and R8.95 this week but there was potential for further weakness if the R8.95/8.96 level is breached, one trader said.

"We are looking for more short-term weakness," he said.

"The fundamental backdrop is still pretty weak and that's reflected in the numbers we saw last week."

After hitting a two-week high last Thursday, the rand was dragged lower the following day when data showed South Africa's trade deficit had widened more than expected in October.

The rand often strengthens towards year-end due to exporter demand for the currency but the poor backdrop and risks associated with the ANCs' elective conference this month are likely to dampen sentiment, the trader added.

Government bonds were weaker with the yield on the 2026 paper up 6 basis points at 7.62% and that on the 2015 bond 6.5 basis points higher at 5.53%.

 
bonds  |  rand  |  dollar  |  markets

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