The rand extended overnight gains, trading firmer on Thursday in response to news that the IMF had given Brazil a $30-billion cash lifeline and an
official go-ahead for Angloplat’s expansion plans.
At 0700 GMT the unit was trading 10 cents firmer at 10,38 to the dollar, after touching 10,36 when the market opened. It broke through key resistance at 10,45 and 10,40 in offshore trade when domestic markets shut.
“The biggest positive is the Brazilian package approved by the IMF — all emerging markets have gained across the board,” a domestic trader said.
“Another big reason is the Angloplat deal and the fact that the government is willing to meet with mining groups ? people are thinking that the empowerment plans may not be that bad.”
The trader was referring to proposals to shake up South Africa’s mining sector by speeding up the transfer of ownership to blacks, which wreaked havoc on domestic mining shares when they were leaked on July 26.
News on Wednesday that the government had approved the ambitious expansion plans of Anglo American Platinum ? the world’s number one platinum producer — had calmed the nerves of investors, particularly foreigners.
Traders said the rand — which touched a 3-1/2 month low of 10,75 on Tuesday — was likely to trade in a range between 10,35 and 10,55 for the time being. If it broke through 10,35, it could firm further, and if it closed below 10,28 it stood a good chance of reaching 10,17 again, they said.
The rand’s abrupt dive at the start of the week ended months of relative stability as it rallied in the wake of a historic 37% plunge against the dollar late in 2001, which took it to a record low of 13,85 on December 20. Bonds also took heart from the firmer rand. The yield on the benchmark R153 due 2010 was down six basis points at 11,24%, while the yield on the most traded R150 due 2005 fell 5,5 basis points to 11,22%.