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Johannesburg - The rand was steady around Tuesday’s closing levels in early trade on Wednesday, but conditions remained volatile and uncertain.
This is the case not only for the rand‚ but for the Australian‚ New Zealand and Canadian dollars as well.
On Tuesday the rand briefly hit an intraday best level of around R9.66 per dollar.
Late on Tuesday afternoon the market, however, perceived some remarks by the Reserve Bank as negative. This weakened the rand in late trade.
RMB analysts said in the morning report that the rand continues to fight local negatives.
“The market’s sensitivity to strikes has diminished‚ but the news flow remains poor. Yesterday’s Sarb (South African Reserve Bank) comments ostensibly hurt. Why this should be the case is not clear. It’s not at all surprising that they are going to have to revise growth forecasts downwards.
"Their comments on the rand are exactly in line with our thinking: the rand is weaker than fair value‚ it risks overshooting further‚ and the major worry is the reduction of capital inflows‚” the analysts said.
They added that the rand/dollar looks set to swing wildly in large ranges‚ awaiting direction from US employment statistics later in the week.
The rand is drawing some support from the fact that foreigners have returned to the bond market‚ buying a net R4bn of local bonds on Tuesday.
The report continues that there is “a massive vote of confidence in the outlook for the rand. Rather than panicking‚ foreigners are using the weakness in the rand and bonds as a buying opportunity. This willingness to buy hints that the rand will eventually recover a lot‚ or all‚ of May’s losses.
"It also removes some of the risk of a rand run. We had worried that bond selling and rand weakness would feed off each other and spiral out of control. Yesterday’s strong activity suggests that this is unlikely‚” they said.
At 08.30 the rand was bid at R9.8200 to the dollar from a close of R9.8210 overnight. The local currency was bid at R12.8490 to the euro from its previous close of R12.8482 and was at R15.0440 against sterling from R15.0318 at its previous close.
The euro was bid at $1.3099 from $1.3078 at Tuesday’ s close.
This is the case not only for the rand‚ but for the Australian‚ New Zealand and Canadian dollars as well.
On Tuesday the rand briefly hit an intraday best level of around R9.66 per dollar.
Late on Tuesday afternoon the market, however, perceived some remarks by the Reserve Bank as negative. This weakened the rand in late trade.
RMB analysts said in the morning report that the rand continues to fight local negatives.
“The market’s sensitivity to strikes has diminished‚ but the news flow remains poor. Yesterday’s Sarb (South African Reserve Bank) comments ostensibly hurt. Why this should be the case is not clear. It’s not at all surprising that they are going to have to revise growth forecasts downwards.
"Their comments on the rand are exactly in line with our thinking: the rand is weaker than fair value‚ it risks overshooting further‚ and the major worry is the reduction of capital inflows‚” the analysts said.
They added that the rand/dollar looks set to swing wildly in large ranges‚ awaiting direction from US employment statistics later in the week.
The rand is drawing some support from the fact that foreigners have returned to the bond market‚ buying a net R4bn of local bonds on Tuesday.
The report continues that there is “a massive vote of confidence in the outlook for the rand. Rather than panicking‚ foreigners are using the weakness in the rand and bonds as a buying opportunity. This willingness to buy hints that the rand will eventually recover a lot‚ or all‚ of May’s losses.
"It also removes some of the risk of a rand run. We had worried that bond selling and rand weakness would feed off each other and spiral out of control. Yesterday’s strong activity suggests that this is unlikely‚” they said.
At 08.30 the rand was bid at R9.8200 to the dollar from a close of R9.8210 overnight. The local currency was bid at R12.8490 to the euro from its previous close of R12.8482 and was at R15.0440 against sterling from R15.0318 at its previous close.
The euro was bid at $1.3099 from $1.3078 at Tuesday’ s close.
