Last Updated- Nov 12, 2009 7:56 - - 0 Comments


South Africa rand weakens against US dollar

SA RandSouth Africa’s rand softened against the dollar on Thursday and should be constrained in ranges for much of the session, taking its cue mainly from the euro.

The domestic currency has gained more than 20 percent against the dollar since the start of the year, prompting comments from the central bank and the government that it is overvalued, to the detriment of the economy.

At 0643 GMT, the rand traded 0.71 percent weaker at 7.4125 to the dollar compared to Wednesday’s close at 7.36.

“The rand is a bit weaker from yesterday. The euro looks overdone but is not turning and I think that’s our key. Until the euro breaks 1.4950 (against the dollar) the rand should stay pretty much in ranges,” said RMB chief dealer Jim Bryson.

The eurozone is South Africa’s main trading partner and the rand therefore tends to take direction from the European currency.

“The danger now is 7.48/dollar, whilst we remain above 7.35/38. The rand is trying to bottom but needs some kind of push to get it closer to 7.48,” Bryson added.

Economic Development Minister Ebrahim Patel said earlier this week there would be debate on the rand, but this did not necessarily mean exchange rate policies would change. Patel has denied proposing to “freezing” the rand.

The JSE’s blue-chip Top-40 December futures contract dipped 0.53 percent, signaling a weak start for the JSE securities exchange at 0700 GMT.

Government bonds were largely steady, with the yield on the 2015 bond up just half a basis point at 8.30 percent while that for the longer-dated 2036 bond was unchanged from Wednesday’s closing level of 8.565 percent.

Source: Reuters

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