The rand shrugged off South Africa’s third democratic election on Wednesday and was flow-driven in a choppy, illiquid market.
At 11.47am, the rand was quoted at R6,5363 to the dollar from previous close of R6,5651, while the euro was quoted at $1,1904 from a previous $1,1937.
“The rand has been up to R6,64 on stop losses this morning, but then a London bank had a big order to sell dollars and took it from R6,60 to R6,50,” a London-based currency trader said.
South African players are absent from the market as the day as been declared a public holiday due to the elections.
The trader said that while the market was obviously watching the elections, these were proceeding smoothly and there had been no news out to move the rand either way.
“There is no liquidity with Johannesburg out, so the rand has been all over the place. But it is looking pretty heavy at the moment. There seem to be dollars coming into the market,” he commented.
Tim Coope, a currency trader at Standard Bank London, agreed that the election was having little effect on the local unit.
“The moves in the rand have had nothing to do with today’s elections — it’s just a United States dollar play. The market has completely discounted the result of today’s election, which is likely to see the ANC [African National Congress] win a significant majority,” he commented.
Traders expected the rand to trade in a R6,45 to R6,60 range for the rest of the day.
The rand weakened sharply on Tuesday as players squared positions ahead of the elections. The dollar, which rallied after the release of better-than-expected US retail sales data, contributed to the rand’s weakness, but currency traders noted that the local unit had lost ground against the cross currencies as well.
AFX reported that the dollar held its gains against the European currencies and the yen after robust US retail sales data on Tuesday triggered speculation an interest rate hike in the US may come sooner than some had expected.
The euro remained well below the $1,20 mark — a low for the year — at $1,1925. — I-Net Bridge