After its brief correction on Monday afternoon, the South African rand resumed its trend firmer on Tuesday morning helped by exporter dollar sales. A firmer euro overnight also helped the rand, currency traders said.
At 1141, the rand was trading at 7,4305 to the dollar from a New York close of
7,4550. It was also a tad stronger against the euro at 8,5346 from a previous 8,5847.
The rand was trading at 12,2542 against sterling from Monday’s close of 12,3453.
The euro was quoted at $1,1542 from $1,1524 late on Monday in New York, while gold was quoted at $347,30 an ounce from a previous $346.40/oz.
“The rand is quite strong again, following its trend of the past few days. There are
some dollar bids around 7.40, otherwise it is very quiet,” a currency trader said.
He continued that exporter dollar sales on Tuesday morning helped take the rand to its firmer levels. The trader expected the rand to trade between 7,40 and 7,60 to the dollar in the short term.
“If 7,40 goes, we could see the rand firm to 7,30,” he concluded.
Earlier in the day, another trader said that the rand had recovered somewhat from
Monday’s worst level of around 7,57 on the back of the stronger euro.
However, the single currency’s weakness last week failed to negatively affect the
rand, which enjoyed a strong rally after comments by South African Reserve Bank governor Tito Mboweni and then Finance Minister Trevor Manuel helped underpin positive sentiment towards the currency.
Earlier on Tuesday, the rand failed to respond to better-than-expected money supply data released at 0800.
The rate of growth of South Africa’s broad M3 money supply measure rose to 7,03% in the year to end May from a revised 9,98% (10%) in the year to end-April.
Credit extension to the private sector grew at a rate of 17,40% y/y in May from a
revised 22% (21,93%) in April. According to the new definition, which excludes loans made to provincial governments, credit extension growth was at 17,78% y/y from April’s revised 22,95% (22,88%).
M3 money supply growth was expected to slow to a rate of 8% y/y in May, according to a consensus of 10 private sector economists surveyed by I-Net Bridge. At the same time, May private sector credit extension (PSCE) was forecast to have risen marginally to 23% y/y. The range of economists’ expectations for M3 was from 7,1% to 9,36%, while that for PSC was between 22% and 23,8%. – I-Net Bridge