Cape Town - The rand breached the R10/$-mark for the first time since 2009 on Thursday, extending losses after President Jacob Zuma expressed concern about the impact of mine labour unrest."There we have it, ZAR breaches 10.0, a very dramatic move
in just a short period from our original Q2 forecast of 9.50," said Nomura emerging markets analyst Peter Attard Montalto.
The rand hit a session trough of R10.0080 to the greenback, the weakest in over four years compared with Wednesday's close of R9.82/$.
Montalto said the rand's recent weakness (a few weeks back) was due to a shift to dollar strength has been driven much
more this week by rand idiosyncrasies, real money hedging and also most likely
some actually real money outflow as well, very much different from the sell-off in the first quarter.
"We still believe there is more risk events to play out through June but
we can probably argue that a larger amount of that will be priced in now.
don’t expect any real forex intervention from the Reserve Bank unless the market
functioning breaks down – verbal intervention is entirely possible from Sarb
and the government though they will have to do better than Zuma’s speech this
morning which fell flat with zero new policies or reassurances to the market
(which lets remember was the primary target of the speech)," he said.
Montalto said interest rate hikes are
still not a near term option unless the rand went parabolic.
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