The South African rand traded close to the 8,85 per dollar level late on Friday afternoon in what traders described as “another weak close” for the local unit. Traders expect the rand to again test the 9 per dollar level next week.
At 1624, the rand was trading at 8,8475 to the dollar from a New York close of 8,8380. It was about seven cents weaker against sterling at 14,3090 from Thursday’s 14,2416 and had shed almost 6 cents against the euro to trade at 9.4307 from a previous 9,3813.
“The rand basically came off from its weaker levels of around 8,92 reached early this afternoon. People were caught long on dollars and we saw exporters at the higher levels,” a currency trader said.
A second trader explained that the rand had weakened when overseas banks, which had been long on rands and short on dollars, took profits before the long weekend.
US markets are closed on Monday for Martin Luther King Day. He said the rand seemed to be holding quiet well around the 8,80 per dollar level.
Commented the first trader: “Once again we have had a weak close. I wouldn’t be surprised if we see a weaker rand in the days to come. If it breaks 8,90 to 8,91, it could test 9 rand per dollar again.”
The second trader agreed. “We’ll need a shake-up between 9 and 9,20 before we see the rand strengthening again,” he asserted.
On Wednesday morning, the rand traded at 8,9875 to the dollar before recovering in late afternoon trade when players in New York were caught long on dollars.
The January survey of economists by UK-based Consensus Economics shows that, according to the mean of economists’ forecasts, the rand should stay below R10 per dollar until the third quarter 2004.
The quarterly average is R9,23 per dollar in the second quarter 2003, rising to 9,89 in the second quarter 2004 before reaching R10,11 per dollar in the third quarter 2004.
This view coincides with that of international credit ratings agency Standard & Poor’s (S&P), which expects the rand to be less volatile this year compared with last year. Last year the quarterly averages were respectively 11.53 rand per dollar in the first quarter, then 10,45, 10,43 and only 9,63 in the fourth quarter last year.
Dow Jones Newswires reports that the US dollar was wobbling, but not badly bruised, after yet another monthly foreign trade deficit. There was a record $40,1-billion trade deficit for November, much wider than the $37-billion consensus forecast from October’s $35,22-billion. – I-Net-Bridge