OWN CORRESPONDENT, Johannesburg | Thursday 1.20pm.
THE rand continued strengthening of Thursday’s low of R7,20 to the dollar in morning trade, due to a stronger euro overnight.
At the same time markets did an about-turn on Thursday’s gains.
By 11am the currency was trading at R7,13 to the dollar. The overall was 0,47% or 33 points down, with gold shares taking the worst knocks, trading 1,32% or 12 points down.
Gold was US35c down at the same time on international markets, trading at $270,50 an ounce.
The rand’s volatility continued on Thursday as it slid to a fresh record low of R7,20 to the dollar, hit by a combination of fresh concern over developments in Zimbabwe, inflation fears and euro weakness.
Analysts however agree with President Thabo Mbeki’s statement two weeks ago that the fall of the rand has more to do with strength of the dollar than with the Zimbabwean crisis.
Econometrix analyst Tony Twine said only 3% to 4% of the currency’s fall this year can be attributed to the Zimbabwean situation.
He pointed out the fall of the rand is on a par with that of the Australian dollar and the euro, and that it is absurd to suggest a link between the Zimbabwean crisis and any weakness in those two currencies.
Traders said the currency, which has lost more than 15% of its value against the dollar so far this year, could sink even lower after the US market opens. Offshore players have been the main drivers of negative sentiment recently.