The rand opened a touch weaker against the dollar on Monday but sentiment remained bullish and it was seen consolidating at current levels near a three and a half month peak reached last week, traders said.
The rand was traded at 10,01 against the dollar at 0610 GMT, compared to 9,95 per dollar — its strongest level since July 21 — reached late on Friday.
Traders said the rand was reacting to a new emerging markets index released by Morgan Stanley, which took South Africa off the list.
”We will see whether there is further reaction to that decision today, but the rand still looks bullish and we expect a consolidation around current rates,” a senior trader said.
Analysts said they expected the unit to trade within the 9,95/dlr to 10,00/dlr range throughout most of Monday.
”We are thinking that the rand will come lower (stronger) than it’s open as it is looking strong at the moment,” a trader said. The currency, which has strengthened about 20% this year after sliding 37% in 2001, has been consistently repelled from the psychologically crucial 10,0/dlr level, suggesting gains below there will be tough to sustain.
Importer demand is also seen kicking in at these levels as importers snatch the cheapest greenbacks they have seen for some time. The rand’s brief break below 10,0/dlr last Tuesday was its first in over three months.
Its rally has been fuelled by attractive yields from steep local interest rates. The central bank has also tightened up on rules requiring exporters to repatriate their hard currency earnings within specified time frames.
The yield on the short-dated R150 was at 11,86% compared to 11,88 percent on Friday. The yield on the longer-dated R153 was 11,55% from 11,565% at close on Friday.
There are no major economic indicators expected this week. – Reuters