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Johannesburg - The rand recovered slightly at midday on Friday but remained under pressure generally as the market awaited any further news on domestic labour woes.
On Thursday the local currency fell to its weakest level against the dollar in about four years‚ losing as much as 0.7% to R9.18/$ before recovering some of its losses to close at R9.1386/$.
News that unprotected strikes were taking place at diversified resources group Exxaro’s (EXX’s) Matla and Arnot mines in Mpumalanga sparked a selloff of the rand on Thursday.
“Positive comments from Mario Draghi with regard to the eurozone lifted the euro and assisted in halting the rand’s slide as positive global sentiment picked up momentum again‚” said Mark Kalkwarf a senior portfolio manager at the Iquad group.
Both the BOE and the ECB left rates unchanged on Thursday.
At 11:22 the rand was bid at R9.1044/$ from R9.1386/$ at Thursday’s close.
The local currency was bid at R11.9268/€ from its previous close of R11.9791/€ and at R13.6706 against sterling from R13.7296 before.
The euro was bid at $1.3093 from $1.3107 at Thursday’s close and $1.2978 at Wednesday’ close.
Stanlib’s chief economist Kevin Lings said as far as the bank was concerned‚ the local currency was currently undervalued. “For us the fair value would be around R8.60 to the dollar.”
“There is no doubt that a huge amount of pressure built up in the system with the current account widening‚ and it has become more and more problematic to fund that. We were previously able to fund that.”
Lings said that although the country was successful in attracting foreign flows towards the end of last year‚ these were not big enough to offset the widening trade deficit.
On Thursday the local currency fell to its weakest level against the dollar in about four years‚ losing as much as 0.7% to R9.18/$ before recovering some of its losses to close at R9.1386/$.
News that unprotected strikes were taking place at diversified resources group Exxaro’s (EXX’s) Matla and Arnot mines in Mpumalanga sparked a selloff of the rand on Thursday.
“Positive comments from Mario Draghi with regard to the eurozone lifted the euro and assisted in halting the rand’s slide as positive global sentiment picked up momentum again‚” said Mark Kalkwarf a senior portfolio manager at the Iquad group.
Both the BOE and the ECB left rates unchanged on Thursday.
At 11:22 the rand was bid at R9.1044/$ from R9.1386/$ at Thursday’s close.
The local currency was bid at R11.9268/€ from its previous close of R11.9791/€ and at R13.6706 against sterling from R13.7296 before.
The euro was bid at $1.3093 from $1.3107 at Thursday’s close and $1.2978 at Wednesday’ close.
Stanlib’s chief economist Kevin Lings said as far as the bank was concerned‚ the local currency was currently undervalued. “For us the fair value would be around R8.60 to the dollar.”
“There is no doubt that a huge amount of pressure built up in the system with the current account widening‚ and it has become more and more problematic to fund that. We were previously able to fund that.”
Lings said that although the country was successful in attracting foreign flows towards the end of last year‚ these were not big enough to offset the widening trade deficit.
