The rand remained firm below the R6-per-dollar level in late morning trade on Thursday, although importer demand for dollars was preventing it from fully capitalising on strength in the euro, which was trading near record highs.
At 11.39am, the rand was quoted at R5,9468 per dollar from an overnight close of R5,9651 on Wednesday, R6,0566 on Tuesday, R6,0600 on Monday and R6,1176 on Friday.
It was quoted at R7,7657 to the euro from a previous R7,7669, and at R11,0650 against sterling from Wednesday’s R11,0940.
The euro, which earlier touched a new high of $1,3075, was quoted at $1,3056 from $1,3033 late on Wednesday, while gold was quoted at $444,50 an ounce from a previous $444,63/oz.
“We have seen good demand for dollars from local importers and as a result, there has been no massive strength in the rand despite the euro trying new highs,” a currency trader said.
“At this stage, the market is just watching major currencies for direction. All indications are that the offshore market is looking to target R5,85.”
However, the trader did not expect this level to break just yet and was expecting the rand to trade in the range of R5,90 to R6 per dollar for the day.
R5,85 — which the rand reached when it rallied in July — was its best level since January 1999.
The trader said that should this level break, the local unit would drift into semi-uncharted territory and that the next technical level is at about R5,50. This would see the rand at its best level since November 1998.
AFX reports that the dollar continued to plumb new lows against a growing number of currencies as players bet against the possibility that any central bank will step in to prop up the United States unit.
“The dollar remains under serious and relentless pressure,” said Steve Pearson at HBOS.
Analysts say there is enough buying power waiting in the wings to take the euro above $1,31.
“But although focus inevitably gravitates toward the euro, it is the breadth of the dollar’s declines that is most striking,” said Pearson.
So far only the pound, yen and Australian dollar have yet to make new highs for the year. Still, all three were at multiple month highs against the dollar.
Significantly, the US currency fell under the 104-yen mark for the first time since early April.
The absence of official intervention so far is also notable; central banks from Russia to Japan and South Africa all now appear to be standing aside, allowing moves the size and speed of which would previously have elicited a knee-jerk response, said Pearson.
South African President Thabo Mbeki on Wednesday reiterated South African Reserve Bank Governor Tito Mboweni’s view that the rand’s value should be determined by market forces. He said the government has not discussed intervening in the forex market to weaken the rand. — I-Net Bridge