The South African rand was trading below the key R6-per-dollar level in early trade on Thursday, which it broke overnight on the back of a stronger euro and news that competition authorities had approved the Vodafone-Vodacom deal. The local unit was last below R6 per dollar on May 9 last year.
At 8.04am, the rand was bid at R5,9827 per dollar from an overnight close of R5,9970 on Wednesday and R6,0628 on Tuesday. It was bid at R7,2702 to the euro from a previous R7,2694 and at R10,5500 to the British pound from Wednesday’s R10,5597.
The euro was bid at $1,2141 from $1,2138 late on Wednesday and $1,2057 late on Tuesday, while gold was quoted at $546,50 a troy ounce from a previous $547,50/oz.
The rand’s best level against the dollar so far on Thursday was R5,97.
“The rand broke through R6 on the euro up and the Vodafone-Vodacom deal,” a currency trader said.
He added that players were still looking to sell dollars and the rand’s move below R6 — which had been widely expected — was merely a continuation of the trend seen over the past week or so.
The Competition Tribunal on Wednesday gave a deal, which will see United Kingdom-based mobile giant Vodafone increase its stake in South African cellular network operator Vodacom from 35% to 50% by acquiring at least 90% of VenFin, the green light. VenFin owns 15% of Vodacom.
The $2,4-billion transaction is the second-biggest foreign direct investment deal in South African history.
For the day, the rand was expected to trade in a R5,95-to-R6,05 range and be driven by the euro and market flows. Internationally, the market’s focus will be on United States trade data to be released at 3.30pm.
According to AFX, the dollar fell against other major currencies in early afternoon trade in Tokyo on worries that a worse-than-expected US trade data number on Thursday would reinforce already negative sentiment towards the greenback, dealers said.
The market is expecting the trade deficit for November to have narrowed to $66-billion from a record $68,9-billion in October, but any figure that comes in worse than the market consensus is likely to immediately put downward pressure on the greenback. — I-Net Bridge