TUESDAY, 10.30AM
The rand depresiated further against the dollar on Monday, losing 3c to hit a new six-month low of R4,66, before backing of slightly to close at R4,6555.
However, analysts said the latest fall in the local currency is not yet cause for concern and is well within expectations. Reserve Bank deputy governor James Cross on Monday said the rand’s latest depreciation should not “unduly influence” monetary policy as long as it is contained within “appropriate” levels.
With the rand managing to hold its own against most European currencies, Cross said the Bank still believes the current fall in the local currency has more to do with the strength of the dollar than the weakness of the rand. “With the dollar strong against virtually all currencies, it is to be expected that it should also be strong against the rand.”
Analysts said the Bank had not been interveining in the currency market, indicating it is not concerned at the rand’s drop. Dealers added that the drop was a result of regular demand and not speculation, and that the gentle decline will likely deter speculators. The decline will have a positive effect on exports and the current account.
Meanwhile, the Johannesburg Stock Exchange had a directionless day, taking its only cue from Wall Street, where the Dow Jones industrial index shed 50 points by the time local markets closed.
The JSE’s industrial index, under Wall Street’s pall, was dragged down by the weaker currency and bond markets, losing 35 points to close at 9 110. Meanwhile, government’s R150 long bond weakened, with yields creeping up to close at 14,135% from Friday’s 14,090%.
The financial index continued its fall from recent highs, shedding another 72 points to 10 281,5. Only gold shares resisted the downward pressures, with the index gaining six points to 970 despite a small drop in the gold price. The all share index lost 12 points on the day to close at 7 445.