The rand opened firmer on Friday after the South African Reserve Bank (SARB) said on Thursday that it would not lower interest rates and that the rand was still under-valued at R9,25 per dollar.
The most recent calculation of the rand’s purchasing power parity rate is R5,84 rand per dollar, while in the first quarter 2000, the average was R6,30 per dollar.
The rand reached its best level this year at R9,0585 per dollar on Tuesday, but profit taking and a stronger dollar on the back of upbeat American economic data saw the rand end at 9,2680 in New York on Wednesday. In early trade on Friday, the rand was
range-bound between 9,2500 and 9,2850.
As recently as Thursday last week it had traded above 9,70 and on November 4 had still traded above R10 per dollar.
At 0850 local time the rand was quoted at 9,2500 to the dollar compared with Thursday’s close of 9,2900, after it had tested the 9,70 level on Thursday last week.
The local unit was also stronger against other major currencies. Against the British pound it was at 14,3520 from Thursday’s close of 14,3793 and last Thursday’s close of 15,2107, while it stood at 9,2025 to the euro from 9,2075 at Thursday’s close and 9,6336 at last Thursday’s close. On Tuesday it had reached a best level of 8,9708 rand per euro.
“The rand is stronger on weekend carry trade positioning now that the SARB has kept the interest rate differential in favour of the rand,” a dealer said. – I-Net Bridge