The South African rand was looking soggy in early trade on Wednesday after sliding overnight on weakness in emerging-market currencies and stop losses triggered in euro-rand. Traders expected the local unit to weaken further, targeting the R6,80-per-dollar level.
At 8.41am, the rand was bid at R6,7085 per dollar from an overnight close of R6,7008 on Tuesday and R6,5043 on Monday. Overnight, the rand traded at R6,77 per dollar — its worst level since mid-November last year. It was bid at R8,6455 to the euro from a previous R8,6351 and Monday’s R8,3018, and at R12,6160 against sterling from a close of R12,6190 on Tuesday and R12,0862 on Monday.
The euro was bid at $1,2876 from $1,2873 late on Tuesday, while gold was quoted at $653,45 a troy ounce from a previous $652,45/oz.
A currency trader said emerging markets are being blamed for the rand’s weakness, which came despite a soft dollar and stable gold price.
“Other emerging markets are a bit softer. Also, euro-rand broke R8,50, which was a big break, and stop losses were triggered.
“The rand is moving into higher [weaker] ranges of R6,60 to R6,80. We are looking for a move towards R6,80 at some stage today.”
According to AFX, the dollar drifted lower against major currencies in Asian trading amid uncertainty over the prospect of the United States economy and on the effect a newly nominated Treasury secretary might have on US foreign-exchange policy, dealers said.
“With the recent weak economic data in the US, such as housing sales and consumer sentiment, the market is becoming wary about the prospect for the US economy and interest rates there,” Commerzbank treasurer Ryohei Muramatsu said.
Unlike before, Muramatsu said market players are not sure if the Federal Reserve will raise rates again at its next policy meeting in June, much less after that.
The nomination of Henry Paulson, chairperson and chief executive of Goldman Sachs Group, as successor of Treasury Secretary John Snow was also creating some anxiety in the market, dealers said. — I-Net Bridge