/ 3 December 2002

Rand firmer, but still range bound

The rand was marginally firmer, but still range bound in noon trade on Tuesday after some consolidation in the market after last week’s rally which saw the local currency surge to an almost 14-month best level of 9,0585 against the dollar.

At 1200 local time (1000 GMT) the rand was quoted at 9,2125 to the dollar– almost three cents firmer than its overnight New York close of 9,2400.

However, it was marginally softer against the other major currencies — at 14,3963 against the British pound off a previous close of 14,3758, and at 9,1953

against the euro compared with 9,1665 late on Monday.

Dealers said the market was seeing fairly even two-way interest in the rand which was keeping the currency stuck in a range of between 9,15 and 9,30 to the dollar.

The local currency tested an intraday best level of 9,1580 per dollar on the back of exporter dollars in the market. However, importers brought it back to its present level.

“There is no real fundamental reason behind the rand’s performance at the moment. It’s just a matter of two-way interest and market consolidation. Also, moving closer to the end of the year, liquidity is moving away from the market,” a local forex trader said.

He added that while it was being speculated that the local unit could break below the 9,00 per dollar level, he was less optimistic.

Currency dealers are waiting to see if the European Central Bank decides to cut interest rates this week which could impact on the rand’s performance. An interest rate cut should helpthe carry trade and cause the rand to strengthen even further. – I-Net Bridge