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Johannesburg - The rand firmed against the dollar on
Tuesday, with investors betting that continued weakness in global growth will
lead to co-ordinated monetary stimulus from central banks, which would boost
emerging markets assets such as the rand.
The local unit was traded at R8.1275 per dollar at 06:36
GMT, 0.45% higher than its close in New York on Monday but still within a 10
cent trading range set on Friday.
“The market is stuck at the moment, waiting for further news
from the central banks,” said David Gracey, a currency trader for Investec.
Some market players have taken the view that if global
growth continues to be soft, it increases the possibility that central banks
such as the Federal Reserve and the European Central Bank will stage
coordinated monetary stimulus to try and revive their economies.
“The rand is firming because of the potential for further
stimulus measures - in other words, a debasing of the major currencies. The
rand would do well against those currencies, and the gold price has also risen
in anticipation of that,” Investec’s Gracey said.
Rand bulls seem to have surrendered at the R8.07 level hit
in Friday and Monday’s sessions, pulling back in what analysts say is a
technical correction from overbought levels last week.
It needs to break through R8.20 support on the weaker end
and R8.06/05 resistance to see further gains.
In absence of any local data until Wednesday, the rand is
likely to take direction from global developments in this session.
The eurozone will release GDP numbers and the United States
releases retail sales amongst a spew of international data due later in the
session.
Worse-than-expected data is likely to temporarily depress
emerging market currencies but they will get support from expectations that those
central banks will act to stimulate their weak economies.
Locally the Treasury will sell R2.1bn in government paper.
Results are due after action closes at 09:00 GMT.
Yields were slightly higher partly due to auction positioning, at 5.7% on the 2015 note and 7.485% on the 2026 issue.
