Johannesburg - The rand see-sawed either side of the R10 per dollar level on Friday as the dollar strengthened further and
global equities headed south.
At 15:30 the rand was bid at R9.9975 to the dollar from a previous close of R9.8750. It was bid at R12.7448 to the euro from a previous R12.6969 and at R16.1958 against sterling from R16.1571 before.
The euro was bid at $1.2752 from $1.2861 overnight, while gold was quoted at $741.13 a troy ounce from $735.50/oz overnight.
A trader said that although the rand remained volatile, it seemed to have settled into a range of R9.80 to R10.20 per dollar, which indicated a return to more normal conditions after the recent wild moves.
"We are certainly not out of the woods yet - the dollar is still king," he added.
"The daily ranges were 75c and should be 10c-15c in a normal
market - that is massive - but they have reduced to around 50c. So volatility is improving, but we are not out of the woods yet when compared to normal levels," ETM economic analyst Russell Lamberti added.
The rand's weakening this month resulted in the most volatile month ever, exceeding that of December 2001. If one divides the monthly range by the monthly average to use as a measure of volatility, then October's volatility was 26.63% compared with September's 6.65% and December 2001's 23.22%.
RMB said in its morning report that November has historically seen the USD turn for the worse. And all this feeds through into a seasonality that leads the best time of the year for the rand to be between November and May.
Return to weakness
On Thursday the rand moved below R9.50, but was unable to sustain that level, moving back towards the R10 level. Today has seen the rand at an intraday worst bid of R10.21, before it retreated back towards the big figure.
The rand showed scant reaction to the release of trade data, which is often volatile. The effects of the weaker rand will only be reflected in October's data, an economist said.
South Africa recorded a deficit of R7.112bn for its trade with non-Southern African Customs Union trading partners in September after the R5.123bn deficit in August, according to Customs & Excise figures released on Friday.
These numbers follow from the large R14.3bn deficit in July.
A R4.5bn deficit was expected, a survey by I-Net Bridge had
found. Forecasts varied from a R3.0bn deficit to a R5.8bn
deficit.
Dow Jones Newswires report the dollar is in higher demand on Friday as money managers close out the month and after a decline in global equities.
The euro is down against the dollar after stocks fell in Asia and Europe, and with US stock futures signalling the same. Many analysts also credit higher dollar demand to month-end flows, wherein long term traders balance their currency portfolios.
The return to weakness for the risk-sensitive currencies, such as the euro, reverses a week-long trend of strengthening that some signalled as a sign the dollar had reached a ceiling.
"We believe the deleveraging process is likely to be ongoing into year-end as hedge funds and banks continue to shed assets, and expect recovery in risk sentiment to be a slow and choppy process, with deep setbacks such as we are seeing today," analysts at Credit Suisse said.
- I-Net Bridge