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May 27 2012 11:21
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May 27 2012 13:09
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Johannesburg - The rand edged firmer but was off the day's high of 8.2063 - its firmest level since the end of September - after a earlier rally ran out of steam.
The local currency was trading at 8.2850 against the dollar at 17:40, 0.2% stronger than its previous close in New York.
"Generally a quiet day, but in the afternoon we had a sudden rand rally which appeared to be some stop losses being
triggered on people who were long dollar-rand," Citigroup sub-Saharan Africa specialist Leon Myburgh said.
"(We) saw that sudden spike during the afternoon session but there was no follow-through buying, so it's edged up (rand weaker) again."
The dollar dropped to its lowest level this year on concerns about the AAA-rating status of the United States due to its substantial debt, particularly after Britain's outlook was downgraded the previous day.
It was bid at 11.5470 to the euro from a previous 11.5674
and at 13.1405 against sterling from 13.2003.
The euro was bid at 1.4011 from US$1.3902 overnight.
A local trader said: "The stronger rand is nothing more than dollar
play. The weaker dollar is reflected on the dollar/rand, as well as other
currencies."
Said JP Morgan in their forex report: "The dollar/rand is extending lower maintains
the short-term retracement, but the corrective bias suggests the
intermediate term downtrend should resume. The 8.75/8.85 resistance zone
should maintain the downside bias for a test of 8.04/7.86.
Dow Jones Newswires reports the trend lower in the US dollar remained
firmly in place on Friday morning as the euro pierced the US$1.4000 level
for the first time since early January.
The euro reached a high at US$1.4008, its highest level since January 2,
before retreating modestly to the US$1.3992 level, according to EBS.
Without any major new drivers in currency markets, the greenback
continued a broad retreat that was triggered on Thursday by concerns in the
market that the US could follow the UK's ratings outlook downgrade from
Standard & Poor's Corp.
The pound recovered from the turbulence it suffered in the wake of the
S&P announcement Thursday and set a new high for 2009 at US$1.5937.
Analysts at Brown Brothers Harriman in New York said there isn't any US
news to drive the markets with conditions likely to grow less liquid ahead
of the long holiday weekend in the US and UK
The dollar, which fell to a two-month low against the yen of Y93.86
earlier on Friday after Japanese Finance Minister Kaoru Yosano said the
government has no plans to intervene to boost the US currency, has also
recovered to trade above Y94.00.
The euro is trading at US$1.3992 from US$1.3890 in late Thursday
trading. The pound is at US$1.5929 from US$1.5750. The dollar is at Y93.96
from Y94.35 and is also lower against the Swiss franc at CHF1.0876 from CHF
1.0930.
US markets were hit on Thursday on speculation, triggered by rating
agency S&P putting the UK's AAA rating on negative watch, that the US could
lose its AAA rating. Commerzbank, in a research note on Friday, said the
foreign exchange market has overreacted to the events of the last 24 hours
and the movements seen wouldn't withstand closer scrutiny.
- I-Net Bridge