South Africa’s rand steadied against the dollar on Thursday but traders said volatility is likely to persist due to uncertainties in global financial markets.
At 6.30am GMT, the rand stood at 7,11 to the dollar at 6.30am GMT, not far off its New York close of 7,10 on Wednesday.
Traders expected a choppy session with the rand probably trading between 7,06-7,16/dollar.
”We expect the volatility to continue, while the spectre of global markets suggests that the volatility will not subside,” said Danny Pienaar, dealer at Nedbank.
A sell-off in global equities prompted investors to reverse their positions in high-risk assets on the back of concerns over the US credit market.
But on Wednesday, United States stocks rallied as investors snapped up shares beaten down by worries over the deteriorating credit conditions.
Dealers said most emerging markets have strengthened slightly and the rand is likely to follow suit, albeit still vulnerable to international developments.
”If we see any exogenous shocks to equity or bond markets in terms of interest rates, we’ll see the rand react,” he said.
Market players are also looking ahead to policy meetings of the Bank of England and European Central Bank later in the day, both of which are expected to keep rates on hold at 5,75% and 4% respectively.
On the local front, July new vehicle sales will be out around 10am GMT, and will give clues on whether higher interest rates are slowing consumer spending on cars, after sales fell by 12,1% in June.
The central bank hiked rates by 50 basis points in June, adding to 200 basis points in hikes since last June to 9,5%.
South African government bonds were a tad firmer, with yields on the most-active 2010 bond down two basis points to 9,29%, while those on the benchmark 2015 issue were down by the same margin at 8,615%. – Reuters