Rand firms on US retail data

Johannesburg - The rand firmed in the afternoon session on Friday, amid better than expected US retail data.

Retail sales rose last month by 0.3%, counter to the 0.3% decline expected, Dow Jones Newswires reported.

At 16:01 the rand was bid at R7.3566 to the dollar from R7.4057 at its previous close. It was bid at R10.1381 to the euro from its previous close of R10.1515 and was at R11.1566 against the sterling from R11.1682.

The euro was bid at $1.3755 from $1.3685 previously.

A local currency trader said: "The rand has held up pretty well of late. Initial strength this morning was born out of a firmer euro, we then saw an initial knee jerk reaction from the local currency on better than expected US retail data. US consumer spending feeds into equity markets, and it usually translates into flow in emerging markets.

In terms of the rest of the afternoon, I would see the rand hover at R7.40 mid mark against the dollar," he said.

Dow Jones Newswires reported that the dollar rallied after better-than-expected US retail sales.

Retail sales rose last month by 0.3%, the Commerce Department said on Friday. With the Super Bowl football championship game early in the month, electronic store sales soared.

Economists surveyed by Dow Jones Newswires had forecast a 0.3% decrease.

January retail sales were adjusted downward, to a 0.1% increase from a previously reported 0.5% gain.

Excluding the car sector, all other retail sales rose 0.8%. Economists had forecast a 0.1% increase. Ex-auto sales in January rose 0.5%, revised from a previously estimated 0.6% gain.

Retail sales data are an important indicator of consumer spending. Consumer spending makes up 70% of gross domestic product, which is the broad measure of US economic activity.

The retail sales report showed US car and parts sales dived by 2.0% last month. Toyota suffered because of fallout from recalls and quality problems. Its sales fell 8.7% to 100,027 vehicles, previously issued industry data showed.

- I-Net Bridge