The South African rand was steady against major currencies in late morning trade on Wednesday in a quiet market. Currency traders said that the rand had largely ignored the morning’s producer price index (PPI) data, which was in line with expectations, but added that the local unit could strengthen further later in the day after its strong showing on Tuesday.
At 11.52pm, the rand was trading at R7,3576 to the dollar from a New York close of R7,3450. It was trading at R8,0014 to the euro from a previous R7,9663 and at R11,5441 against sterling from Tuesday’s R11,5114.
The euro was quoted at $1,0888 from $1,0857 late Tuesday in New York, while gold was quoted at $364,60 an ounce from a previous $364,65/oz.
“We had a few importers this morning below R7,32 to R7,33, but it has been pretty dull. PPI came in as expected so the rand isn’t moving on that,” a currency trader said.
He continued that the rand could strengthen later in the day, with R7,30 being the first target.
“If it gets through R7,30, the rand could firm to R7,20,” the trader asserted.
He attributed the rand’s rally on Tuesday, which saw it firm from about R7,48 at noon to the mid R7,40s, to the market being caught long on dollars, Stop losses triggered through the R7,45 level gave impetus to the move.
South African producer prices for all commodities rose 1,5% in the 12 months to end July from a 2,3% increase for the 12 months to end July, Statistics South Africa said on Wednesday. On the month, they were up 0,4% in July on an actual unadjusted basis from a rise of 1,4% in June.
South Africa’s July PPI was expected to increase by a median of only 1,4% y/y, according to an I-Net Bridge survey of private sector economists. The range of forecasts was from -0,8% y/y to 1,8% y/y. — I-Net Bridge