The South African rand was trading above 6,20 per dollar after United States President George Bush proposed a Budget that would cut the fiscal deficit to 3% of GDP from last year’s 3,5%.
This shows that the administration is serious about addressing the problems of the twin deficits. Attacking the deficits is one of the reasons why the US dollar is at its strongest level since November.
At 8.50am, the rand was quoted at 6,2201 per dollar from an overnight close of 6,2138 on Monday, 6,1771 on Friday, 6,1238 on Thursday and 6,0326 on Wednesday. It was quoted at 7,9304 to the euro from a previous 7,9111 and at 11,5430 against sterling from Monday’s 11,5520 and Friday’s 11,5890.
The euro was quoted at $1,2766 from $1,2758 late on Monday, $1,2861 late on Friday, $1,2972 late Thursday and $1,3028 late on Wednesday, while gold was quoted at $412,53 a troy ounce from a previous $413,40/oz.
”The US Budget shows that the US is serious about addressing some of their problems. That has led to a stronger dollar, which is putting the rand under pressure. In addition, exporters are staying away again, as they reckon the trend is their friend, so we could test 6,25 rand per dollar today,” a trader said.
AFX reported that the dollar scaled a multi-month high against the euro in US trading on Monday after comments from Federal Reserve chairperson Alan Greenspan on Friday and Bush’s proposed Budget cuts on Monday.
Greenspan told a conference in London that market pressures could stabilise and that over the long run, US budget discipline would help narrow the US’s burgeoning current account gap. – I-Net Bridge