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Rand set to firm for fifth day

Feb 04 2013 09:15
Reuters
Johannesburg - The rand steadied against the dollar early on Monday, looking to strengthen for the fifth straight session due to a technical correction that has left many investors trying to cover short rand positions.

The currency was at R8.8547/$ at 08:26, slightly firmer than its New York close on Friday and gathering momentum away from a four-year low of R9.16 hit last month.

The rand managed to break past R8.85 resistance in late trade on Friday, signalling that further gains were likely this session.

"Our range for today is R8.79-8.88, and we are favouring a push below R8.75 later in the week," Absa technical strategist Judy Padayachee said, adding that the dollar's turn-around above R9.15 sets a bigger bearish bias in the coming weeks.

Charts show the rand could retrace all the way down to R8.60.

Investors have a spew of local data to digest this week, including jobless and manufacturing numbers, which will give key signals on the pace of economic growth.

Friday's Purchasing Managers' Index number was in contraction territory for the fifth straight month in January, pointing to a bleak outlook for the key manufacturing industry this year.

The sector is a major employer and contributes 15% of GDP.

Sentiment indicators such as the Reuters Econometer and the Business Confidence Index are also due this week.

Domestic media are reporting the ANC will throw renewed energy into a contentious policy to subsidise the wages of youth workers entering the job market.

The policy, an attempt to deal with chronic unemployment, met stiff opposition from the ANC's union allies and was never implemented.

Government debt was slightly weaker, with the yields on the 2015 and 2026 issues at 5.335% and 7.32% respectively.



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