OWN CORRESPONDENT, Johannesburg | Friday 4.30pm.
THE rand remained weak by late afternoon, after testing the key resistance level of R7,03 to the dollar in early trade on Friday.
Dealers said the dollar and negative overseas sentiment continues to weigh on the market.
By 4pm the local currency was trading at R7,04 to the dollar.
The JSE suffered a slight setback, closing 0,28% or 21 points down. Only industrials made some gains, closing 1,86% or 154 points in the black.
Financials finished 0,27% or 25 points down, while gold shares slipped an entire 2,17% or 22 points.
By late afternoon gold was trading at $276,95 an ounce on international markets.
The rands 14% decline against the US unit in the last four months has fuelled concern that the Reserve Bank will tighten monetary policy before the end of the year to quell the expected pickup in imported price pressures.
Economists in South Africa are still deeply divided on the outlook for interest rates, but some of those who are predicting further cuts this year have revised their forecasts. “We’ve decided to defer our forecast of a 50 basis point cut in the prime interest rate in 2000 because of the inflation passthrough we’ve had from the rand’s recent depreciation,” JP Morgan economist Peter Worthington said.
If the rand continues to weaken at the alarming rate seen in the past week, there is a real chance that interest rates could rise after all, but this appears unlikely, he added.
However dealers said if support holds, it may be back on course to test R6,98 after trading as low as R6,95 on Thursday.
Asian markets finished stronger, the Hang-Seng 4,27% or 619 points up, while the Nikkei finished 2,82% or 475 points good. By 4pm the Dow Jones was 2,54% or 263 points in positive territory.