The South African rand was slightly stronger against major currencies in early trade on Monday, continuing a move that began on Friday afternoon when the local unit failed to sustain a move weaker that started on the back of poor preliminary current account figures.
Traders expected the rand to remain range-bound for now, with a sustained break needed to give it new direction.
At 8.39am, the rand was quoted at R6,5551 per dollar from an overnight close of R6,5750 on Friday, R6,6050 on Thursday and R6,5251 on Wednesday. It was quoted at R8,0536 to the euro from a previous R8,1027 and at R11,9110 against sterling from Friday’s R11,9730.
The euro was quoted at $1,2301 from $1,2314 late on Friday and $1,2371 late on Thursday, while gold was quoted at $411,20 an ounce from a previous $412,80/oz and Thursday’s $406,88/oz.
“The rand is strengthening a bit and it can only be on gold — I can see no other reason,” a currency trader said.
He added that the move could be sustainable as it looked like players want to sell dollars again, after being dollar buyers recently.
The trader expected the rand to trade in the R6,53 to R6,63 range and said it will need to break out of this to get fresh direction.
He said that Friday had been extremely quiet. While the rand tried to weaken after the figures came out, it strengthened again.
The rand’s recovery came despite weakness in the euro, which it tends to track because the Eurozone is South Africa’s largest trading partner.
Preliminary figures released on Friday showed that South Africa’s current account deficit in the second quarter of 2004 amounted to R49-billion, from a deficit of R20-billion in the first quarter. — I-Net Bridge