Rand suffers big losses

Johannesburg - The South African rand was in sharp retreat versus the major currencies in a thin flow-driven market late Thursday amid mounting global economic gloom.

The local currency has been on the back foot since late Wednesday on a combination of a lack of liquidity locally and rising risk aversion after disappointing US job data.

At 16:10 the rand was bid at 9.7370 to the dollar from an overnight close of 9.6320. It was bid at 13.3387 to the euro from a previous 13.1570 and at 14.9227 against sterling from 14.5495 before.

The euro was bid at US$1.3686 from US$1.3658 overnight.

"At the moment the market is flow driven and thin," a local currency dealer said.

Meanwhile, RMB currency analysts forecast that 2009 is likely to be another tough year for the rand.

They point out that the current account deficit problem remains and funding is becoming increasingly difficult. As a result they are looking at R10.50/$ at the end of the year, but with volatile trade between R9.00 and R12.00.

Immediate pressure, they add, is to the downside of this range but, looking further out, risks remain heavily biased to the upside, with moves possibly triggered by emerging market contagion.

Dow Jones Newswires reports that the dollar is trading weaker Thursday, slipping modestly versus the euro and several other currencies while dipping more sharply against the yen and the UK pound, which has rallied strongly in the wake of the Bank of England's 50 basis point interest rate cut.

Dollar sentiment remains tentative, as the market faces key economic news in the form of Friday's December non-farm payrolls report and a speech later Thursday from President-elect Barack Obama.

- I-Net Bridge