The South African rand reached a new best level for 2002 in early trade on Tuesday as it broke below R9 per dollar to R8,9505.
Dealers said the next key technical resistance level was R8,95, but that if this broke, then the next key level was R8,70 as there had been little support for the rand between R8,70 and R9 per dollar in October last year as the rand headed for a record
worst level of R13,86 rand per dollar touched on December 20.
The recent rand strength was due in part to exporters cutting the period they keep their export receipts in foreign currency deposits. Exporters in September cut their holding period to only 45 days from 89 days in August and a record 147 days in March as they correctly anticipated a strengthening in the rand.
Exporters may hold their export receipts in foreign currency denominated accounts called F178 accounts. The maximum period they may hold their export receipts has varied from seven days under the apartheid regime from 1985 to 1995, 30 days from 1995 to March 1998 and currently 180 days.
The rand first broke above R10 per dollar on November 22 last year when it reached R10,0025, but then recovered to trade below 10 in the subsequent days.
It then reached a best level of R9,7950 on November 29, 2001, after Moody’s Investors Service had upgraded South Africa’s foreign currency rating by one notch to Baa2.
On November 29 2001, as it looked increasingly likely that Enron would opt for Chapter 11 bankruptcy, which it did on December 2 2001 in the largest US corporate bankruptcy until that time, the rand broke through key support levels and reached R10,1925 per dollar as investors hedged their Enron exposure.
The rand then remained above R10 per dollar for the remainder of 2001 and reached a worst level of R13,86 rand per dollar on December 20. It ended the year at R12 per dollar and broke back below R11 per dollar on March 4 this year. This was the day the commission established to investigate the causes of the rand’s collapse started its public hearings.
The worst level this year was R12,2250 per dollar reached on March 8, the day before the Zimbabwe Presidential election started. As there was not as much violence as feared, the rand then recovered steadily and broke back below R10 per dollar on May 17. The rand reached its best level of R9,6350 per dollar on June 4 and traded below R10 for most of June and July.
The leak of a draft mining charter proposing “excessive” transfer of assets to the previously disadvantaged community in late July then saw foreign investors sell off South African assets and the rand formed a “double top” at R10,95 per dollar on August 21 and 22.- I-Net Bridge