Dollar-selling kept the South African rand firm against major currencies in late morning trade on Tuesday after the local unit shrugged off in-line-with-expectations consumer inflation data released at 11.30am.
At 11.49am, the rand was trading at R7,1938 to the dollar from a New York close of R7,2336. It was quoted at R8,2508 to the euro from Monday’s R8,2791 and at R11,8859 against sterling from a previous R11,9206.
The euro was quoted at $1,1488 from $1,1460 late Monday in New York, while gold was quoted at $386,50 an ounce from a previous $387,10/oz.
“The rand isn’t really doing anything on CPIX, but the market still seems to want to push it lower [firmer],” a currency trader said. “It is just sentiment — if you can make money selling dollars, you just keep on doing it.”
He continued that if the rand stayed above Monday’s low of R7,1650, it could bounce to R7,22 or R7,23, the key chart point the rand broke below on Monday.
Otherwise, the rand could test the long-term best levels of about R7,05 seen in late April.
The trader concluded that the rand would most likely trade in a R7,16 to R7,22 range for the rest of the day.
South Africa’s CPIX inflation (headline inflation excluding mortgage costs) was up 6,3% year-on-year (y/y) for metro and other areas in August 2003 compared with 6,6% in July, Statistics South Africa (Stats SA) said CPIX was up 0,4% month-on-month (m/m) compared with a 1,1% rise m/m in July.
CPIX is the inflation measure targeted by the Reserve Bank for purposes of inflation targeting. — I-Net Bridge