The South African rand was weaker against the dollar in early trade on Monday on the back of the latter’s recovery against major currencies. Currency traders said that the rand could post more losses and that it is likely to look to the euro for direction.
At 8.36am, the rand was quoted at R5,6951 per dollar from a previous close of R5,6650. It was quoted at R7,6501 to the euro from a previous R7,6689 and at R10,8520 against sterling from Friday’s R10,8750.
The euro was quoted at $1,3452 from $1,3549 late on Friday, while gold was quoted at $434,55 an ounce from a previous $438,10/oz.
A currency trader attributed the rand’s weakness to a correction in the dollar.
“There seems to be interest in buying dollars — stops are building above R5,70 and if the euro goes below $1,34 these might be triggered, which could take the rand up to R5,72 to R5,74,” he continued.
He noted that the rand has recently tended not to move much during the local trading day, but rather in New York when trade is thinner.
He therefore expected the rand to trade in a R5,67 to R5,74 range for the day.
“I would be more a buyer of dollars than a seller today,” the trader added.
AFX reports that the dollar held on to gains against the yen and the euro in thin trading in Singapore with major markets such as Japan and Australia still closed for the New Year holidays.
The euro reached a record high of $1,3666 last week.
The rand tends to follow the euro because the Eurozone is South Africa’s largest trading partner. — I-Net Bridge