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Johannesburg - The rand slid to its lowest levels against the dollar in four years as investor confidence saw a sell-off in bonds.
Nomura's emerging markets analyst Peter Attard Montalto said the recent move to breach those highs was in part due to dollar strength thanks to the moves in real yields there.
"We have long held the view that (extracting from the rand in real terms) long unfair value for the currency is in the dollar-rand much more around 9.75 than the South African Reserve Bank's (Sarb's) own view of short-run fair value of 8.50-8.75."
Added Mohammed Nalla‚ head of strategic research for global markets at Nedbank Capital: “It is a confluence of events that have led us to where we are now.
“The weight of the domestic factors has certainly added additional impetus to the move that was started by dollar strength. The rand does tend to overshoot‚ but I do expect it find some consolidation at current levels‚” he said.
At 15:28 the rand was bid at R9.5615/$ from R9.4313 at Monday’s close and R9.4002 at Friday’s close.
The local currency was bid at R12.2982/€ from its previous close of R12.1655 and was at R14.4684/£ from R14.3985 at its previous close.
The euro was bid at $1.2864 from $1.2897 at Monday’s close.
- I-Net Bridge, Fin24
Nomura's emerging markets analyst Peter Attard Montalto said the recent move to breach those highs was in part due to dollar strength thanks to the moves in real yields there.
However, a large part has also been South Africa idiosyncrasies especially around the mining sector, the role of unions and Amplats restructuring.
Montalto said the currency is now entering fair value for the first time since the start of 2009."We have long held the view that (extracting from the rand in real terms) long unfair value for the currency is in the dollar-rand much more around 9.75 than the South African Reserve Bank's (Sarb's) own view of short-run fair value of 8.50-8.75."
Added Mohammed Nalla‚ head of strategic research for global markets at Nedbank Capital: “It is a confluence of events that have led us to where we are now.
“The weight of the domestic factors has certainly added additional impetus to the move that was started by dollar strength. The rand does tend to overshoot‚ but I do expect it find some consolidation at current levels‚” he said.
At 15:28 the rand was bid at R9.5615/$ from R9.4313 at Monday’s close and R9.4002 at Friday’s close.
The local currency was bid at R12.2982/€ from its previous close of R12.1655 and was at R14.4684/£ from R14.3985 at its previous close.
The euro was bid at $1.2864 from $1.2897 at Monday’s close.
- I-Net Bridge, Fin24
