The rand opened slightly weaker on Tuesday, but traders saw the currency held within a range ahead of consumer inflation data to be released later in the day.
The rand softened to 10,6550 to the dollar by 0705 GMT, from Monday’s Johannesburg close of 10,55. Traders said the market was expecting the worst from CPIX inflation data for July due at 0930 GMT on Tuesday.
”The rand is rangebound for the moment, but we are all waiting for the CPIX data,” one trader said.
”A bad CPIX number is expected, although it is factored in to a certain extent,” he added.
A Reuters poll of 15 analysts last Friday predicted the increase in the CPIX index targeted by the central bank for monetary policy would subside to 9,6% year-on-year for July, from 9,8% in June.
But market participants said some were betting on an annual rise of 9,9%.
Although inflation was not expected to peak until September, most analysts believe the central bank’s main repo rate has peaked at 12,5%, following three increases of one percentage point each so far this year.
Another trader pegged the rand within a range of 10,55 to 10,65 to the dollar, at least ahead of the inflation data.
Technical factors could help the rand strengthen if it stayed within that range, he added, pegging support at 10,70 and resistance at 10,55 to the dollar.
”The rand is a remarkably technical currency at the moment,” he said. ”If it does not trade through 10,70 in the next few days, then momentum (weaker) will subside.”
The rand’s recovery in 2002 has been curbed by a combination of domestic and global concerns, limiting its gains in the year to date to just over 12%, compared with more than 20% earlier in the year.
Bonds were also seen confined to a narrow range. ”We are basically just treading water ahead of the inflation data,” one Johannesburg based trader said.
The yield on the benchmark R153 due 2010 fell 0,5 basis points to 11,325% from Monday’s close, while the most traded R150 gained 3,5 basis points to 11,335%. – Reuters