Rand's run baffles analysts
Johannesburg - South Africa's rand was steady against the dollar on Thursday, after strengthening significantly in overnight trade, baffling analysts as it moved in a different direction than other emerging markets.
The rand stood at R6.9175/US$ at 09:00, little changed from the New York close of R6.9150, after the weakest level of R6.9250 in the session.
Analysts said the local currency's movements could have been exaggerated due to thin liquidity in the markets ahead of the Christmas holidays.
"It's a bit of a strange situation, because the metals' prices are softer, and other emerging markets are weaker," Ion de Vleeschauwer, Rennies Bank chief dealer said.
"I think what's driving it is corporate orders being pushed through in thin market conditions, and moves tend to be exaggerated in those conditions," he said.
Traders said the rand was likely to strengthen further to reach the next level of R6.85/$.
"It's difficult to say how long it (rand strength) will last for but it will probably continue until next week. General importer demand is not there because most corporates are on holiday," de Vleeschauwer said.
"The rand is likely to break stronger because the dollar is still a bit weaker," another trader said.
The rand was also supported by the euro, currency of South Africa's largest trading partner, which was trading next to its 20-month high seen in early December.
The euro inched up to $1.3190, within a 20-month high seen in early December.
Spot gold was still down at $621.30. South Africa is the largest producer and exporter of the precious metal, earning most of its foreign currency from it.
The markets would be eyeing the producer inflation data (PPI) due at 11:30.
"If the PPI comes lower than expected, it's likely to be supportive of the rand. But the currency has not been phased by data lately," de Vleeschauwer said.
Economists polled by Reuters expected producer inflation to accelerate to 10.2% in November.
Government bonds were also firmer on Thursday, with yields on the most-traded R153 bond due 2010 falling three basis points to 8.10% from Wednesday's closing levels while those on the benchmark R157 due 2015 were also down one basis point at 7.935%.
News was from www.news24.co.za
Posted by: www.SouthAfrica-CarHire.com
Great country, great currency
Click Click... Vroom, Vroom
