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Rand stuck in two-week range vs dollar

Feb 14 2013 18:42 Reuters

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Johannesburg - South Africa's rand firmed against the dollar on Thursday but remained in a range as investors awaited President Jacob Zuma's State of the Nation address later in the day.

The rand was up 0.3% to R8.8325/$ at 15:50 GMT.

"Dollar/rand is still stuck in February ranges, where 8.80 support has held since January 18 and significant resistance remains at the February 1 high of 8.99," said Anisha Arora, an emerging market analyst at 4Cast.

"The mood however may be dented with President Zuma's State of the Nation address."

The rand bounced at 8.9985 at the start of February and again on Tuesday as the 9 level provides strong support for the rand.

The 8.80 level is resistance for rand bulls. The local unit managed to trade as firm as 8.8283 in this session before weakening slightly again.

Investors are expecting Zuma to use the annual address to announce a decision on a three-year old controversial policy plan to subsidise the wages of new entrants into the job market.

Labour union COSATU has rejected the plan, saying employers would use it to push out older workers and exploit younger ones.

South Africa has had a 25% jobless rate for the past decade and rising social tensions are putting pressure on Zuma's ruling African National Congress to deal with unemployment.

"At previous ANC meetings we've heard the same story time again that the government 'will continue to provide strong economic leadership and steer the economy boldly,' but this time we need to see concrete plans, without which fresh labour unrest and market discontent cannot be ruled out," 4Cast's Arora said.

The State of the Nation address is at 17:00 GMT.

Government bonds weakened with the rand in thin trading volumes.

Dealers said they were looking for direction from US Treasuries and for the rand to find some impetus and break out of its range.

Yields were up 2.5 basis points to 5.36% on the 2015 note and rose 4 basis points to 7.335% on the 2026 issue.

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rand  |  dollar  |  markets  |  currencies
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