South Africa’s rand built on robust overnight gains on Wednesday after the key technical level of 10,45/dlr was broken and stop-losses forced players to dump dollars after export receipts flowed in.
”The 10,45/dlr level looked quite key and we could now see a move to 10,20/dlr in coming days…There was talk in the market yesterday about big export orders and that could be the impetus for all of this,” said Gensec bank analyst Jacques Potgieter.
At 0830 GMT, the rand traded at 10,3875/dlr, over 10 cents firmer on late Johannesburg after hitting 10,37/dlr earlier, its best level in almost two months.
Dealers said that stop-losses had been triggered at 10,48 and 10,45 and that a move on the day to 10,3350, its best recent level on the bid chart reached on August 8, was on the cards.
Dealers and analysts also said that short-rand positions were getting pricey because of high interest rates. The central bank has raised rates by 400 basis points in the year to date in a bid to stamp out the inflationary impact of the rand’s sharp slide last year and many analysts expect another rate hike in November.
The rand has gained almost 20 cents against the euro on the week to 10,1848. But against the dollar its gains could be capped by the greenback’s renewed strength against other major currencies on the back of Wall Street’s rally.
The rand was seen brushing off the second and final day of a nationwide anti-privatisation strike by the Congress of South African Trade Unions as the government is seen to be firmly committed to pushing ahead with the sale of state assets.
Bond yields crept up after declining earlier amid lingering inflation and interest rate jitters. The yield on the most traded R150 due 2005 was down one basis point from late Tuesday at 12,52% after earlier dipping to 12,46%. The yield on the longer-dated R153 was steady 11,89% after reaching 11,83% earlier. – Reuters