The rand weakened further on Friday morning as the dollar posted further gains against the euro.
“The dollar is back in a big way,” said a local currency trader.
After breaking above the R7,50 level overnight, the rand weakened further on Friday morning and at 11am local time, it was at R7,63 per dollar from R7,4747 overnight.
The euro was bid at $1,5161 from $1,5323 overnight.
Dow Jones Newswires reports that the euro plunged against the dollar and the yen in Asian trade on Friday morning as European Central Bank president Jean-Claude Trichet’s dovish comments overnight fed speculation that the bank won’t hike rates soon.
The massive sell-off of the single currency was prompted by Trichet’s remarks on Thursday, in which he expressed concerns over economic growth. He acknowledged that eurozone growth probably slowed sharply in mid-2008.
As a result, some Tokyo dealers said the euro may fall to $1,48 and Y162 in the coming weeks.
Dow Jones Newswires reported in a market talk that the sideways trading range that has held euro-dollar for the past four months has clearly been broken, notes Commerzbank.
Significant chart support levels were ignored as the rate slumped in Asia, and the bank says from both a psychological and technical perspective the break of the 200-day moving average at 1,5224 was very important. Commerzbank now looks for a test of the 1,50 level. — I-Net Bridge