Rand nudges up in technical correction

2012-12-05 09:12

Johannesburg - The rand firmed on Wednesday on the back of a technical correction against the dollar and a return of investor risk appetite stemming from renewed efforts to deal with Greece and Spain's debt crises.

The currency was in a reversal from oversold levels that took it to a three-and-a-half year low three weeks ago.

However, it was still expected to stay within its recent trading ranges until domestic current account data on Thursday.

The rand was up at R8.7905 to the dollar at 06:08 GMT, from a R8.80 close in New York on Tuesday.

"As we await the release of local current account data on Thursday and US non-farm payrolls on Friday, our preferred range for today is R8.77-R8.85," said Judy Padayachee, technical strategist for Absa Capital. 

The SA Reserve Bank will release third quarter current account data at 08:00 GMT on Thursday.

The current account posted its biggest deficit in over three years in the second quarter, at 6.4% of gross domestic product, and analysts surveyed by Reuters said they expected the shortfall to be even bigger in the third quarter, at 6.55%.

Absa's Padayachee said the rand's recent recovery was taking place within a three-week consolidation pattern and she still expected the unit to be vulnerable into the end of the year. 

If the current account data disappoints, the rand will come under selling pressure, which may push it out of the three-week R9.0 - R8.75 range.

Another factor keeping the rand in check is the slight uncertainty about an ANC leadership election later this month. Market players will look for any change in policy that could result from the election.

Yields on government debt nudged down one basis point to 7.585% on the 14-year benchmark bond and were expected to track moves on the rand as liquidity dries up close to the end of the year.

Treasury will announce debt issuance plans for next week at 09:00 GMT.