South Africa’s rand eased slightly against the dollar on Friday, and could weaken further on the day as investors took profit after its strong gains the previous day.
At about 0730 GMT the rand was at 7,2150 versus the dollar, 0,2% weaker than its New York close on Thursday.
The local unit had rallied over one 1% against the dollar on Thursday despite data showing the current-account deficit widened to 7,8 % of gross domestic product in the fourth quarter of 2006.
Some analysts attributed the rand’s strengthening to the increased likelihood of a hike in interest rates after the central bank left them unchanged at 9% in February.
High rates would improve the differential between South Africa and other investment destinations, putting the rand at an advantage.
But on Friday the rand should lose some ground, traders said.
”I think after the last couple of days this one will be fairly quiet. You might see it drift slightly weaker on possible profit-taking. I think the market might also be a little short dollars,” one trader said. — Reuters