The South African rand opened marginally weaker against the dollar on Tuesday but was expected to pick up some gains during the day on offshore flows
and dollar weakness, traders said.
At 0645 GMT the rand was trading at 9,91 against the
greenback compared to a close of 9,9075 in late Monday trade. Earlier on Monday, it hit a new three-month peak of 9,8870 — its best level since June 18. ”It is virtually unchanged,” one trader told Reuters. ”It is down by the slightest of margins, but nothing has happened to take the shine off the rand.”
Traders said sentiment was still positive after a rally seen in the past few weeks, and they expected the decisive break of 9,93/dollar to lead to a jump to around 9,83/dollar — the next key resistance area.
”At around 9,93/95 we should see exporters. At 9,83/85 we should see importers,” one trader said. The volatile unit has appreciated by about 20% against the dollar so far this year and analysts say it could even approach 9,67, its previous strongest
point for the year hit in May, before the end of 2002. Late in 2001, the rand plunged by 37% against the dollar to a record low of 13,85.
Recent weakness in the US unit, which hit parity against the euro for the first time in three months
on Friday, is also a factor. Offshore investors have shown more willingness to buy the unit in the last few weeks, even though little has changed in terms of South Africa’s solid domestic fundamentals. The rand briefly weakened sharply to 10,27 last Wednesday,
after news of a string of explosions which the government said were planted by right-wing extremists as part of a plot to overthrow the government.
Yields on the longer-dated R153 bonds were at
11,56 from 11,52 percent on Monday. The shorter-dated R150 due 2005 was at 11,83% compared to 11,85% on Monday. – Reuters