The South African rand kept its recent strength against the dollar on Thursday morning on the back of the weaker dollar. Dealers said the April 30 best level of R7,05 per dollar was a key technical level and if that broke then the rand could quickly run to R6,80.
At 09.10am, the rand was trading at 7.0850 to the dollar compared with R7,0981 at Wednesday’s New York close. It was also firmer against the euro at R8,1253 from a previous R8,1432, and against sterling at R11,7272 from Wednesday’s close of R11,7665. On Friday it had still closed above R12 per sterling at R12,0302.
The euro was quoted at $1,1490 from $1,1485 at Wednesday’s New York close and Thursday’s close of $1,1243, while gold was quoted at $388,10 an ounce from a previous $389,55 at Wednesday’s close. On Thursday it had still closed below $380 at $376,45/oz.
The United States dollar has been under pressure since finance ministers from the Group of Seven industrial countries urged more flexibility in exchange rates over the weekend — a call that implied a weaker US dollar to curb a record US current account deficit in the first half of this year.
“We are so close to breaking the key technical level that I think it will be today that we take out the April level. There are probably more stop-losses in place at R6,98, but if that goes then there is nothing until R6,80,” said a trader.
Another trader said the rand was a one-way bet at the moment as there were only sellers of dollars, while importers took to the sidelines as they have seen the rand move about 40 cents in their favour over the past few days.
“The importers are saying, why should I buy if the rand gains another 10 cents tomorrow? Exporters, on the other hand, must come to the market, as the hoped-for bounce to the R10 per dollar level is just a pipe dream,” he said. — I-Net Bridge