The South African rand failed to capitalise on a stronger euro and was steady against the dollar just before midday on Monday in a quiet market. Dealers said, however, that while the rand was likely to remain range bound for the rest of the day, it would likely benefit from any move stronger by the euro.
At 1134, the rand was trading at 7,9470 to the dollar from a New York close of
7,9702. It was little changed against sterling at 12,5460 from a previous 12,5480, but slightly weaker against the euro at 8,6402 from Friday’s 8,5869.
The euro was quoted at $1,0874 from $1,0792 late Friday in New York, while gold was trading at $335,20 an ounce from a previous $331,40/oz.
A currency trader said the market had been very quiet. “The dollar was sold down early this morning to around 7,92 by a local exporter. It seems to have found support at that level,” he said, explaining that importers had come into the market.
While the trader expected the rand to trade in a range of 7,90 to 8,00 to the dollar
in the short term, he said that there was a possibility that the euro would strengthen
later in the day, which would benefit the rand.
Traders noted that the rand had lagged the euro, which was quite a bit stronger
against the dollar.
Late last week, the rand touched new best levels for the year against both sterling
and the euro of 12,4157 and 8,4383 respectively.
According to Dow Jones Newswires, negative reflections on the war with Iraq look set to generate even more dollar selling on Monday. Market analysts pointed out that while model funds may have been driving the greenback lower in the past, other “real money” participants who had been sitting on the sidelines may now enter the market.
Paul Mackel, a currency strategist with Dresdner Kleinwort Wasserstein in London,
suggested reports over the weekend hinting that the war with Iraq will take longer than initially expected had increased uncertainty within the investment community.
“This will bring more sellers in,” he said, noting that expectations of a final US
assault on Baghdad were steadily being deferred. – I-Net-Bridge