The South African rand was consolidating above the 8 per dollar in thin Tuesday morning trade with traders expecting a 8.00 to 8.10 range for the day.
The rand firmed against major currencies in afternoon trade on Monday after the market was caught long on dollars. Currency traders said that the rand had lost ground initially on the back of events in South Africa’s northern neighbour Zimbabwe, but that players had been forced to close their positions when they were unable to push the rand weaker.
At 0902, the rand was trading at 8,0130 to the dollar from a New York close of 8,000 on Monday and 8,0779 on Friday. It was quoted at 9,4348 against the euro from a previous close of 9,4027 and at 13,1369 against sterling from a previous close of 13,0971.
The euro was quoted at $1,1764 from $1,1764 late on Monday, $1,1715 late on
Friday, and $1,1904 late on Thursday. Gold was quoted at $367,20 an ounce from
a previous close of $365,88.
“The rand is looking to consolidate at just above 8 rand per dollar. So far the stronger euro and gold price are not helpi9ng the rand,” a currency trader said.
Another trader said the rand should be stronger given the large foreign purchases of South African bonds, which were at record low yields. In addition, the South African Reserve Bank (SARB) was not buying dollars to the same extent it was in April, when the rand reached its best level so far of R7,05 per dollar.
The SARB indicated that its net open position in foreign currency (NOFP) fell to $986-million in April from $1,220-billion at the end-March, $1,401-billion at end February, $1,489-billion at end-January and $1,618-billion at the end of December.
During May, the government issued a 1,25-billion euro bond, the proceeds of
which were used to extinguish the NOFP.
Foreigners were net buyers of R1,372-billion worth of South African bonds on Monday after net purchases of R321,867-million worth of local bonds on Friday, Bond Exchange of South Africa statistics show. – I-Net Bridge