Rand finds market support, shakes off deficit data
File image: IOL
CAPE TOWN – The rand opened on the back foot on Thursday after rather disappointing trade data on Wednesday, only to recover later after a Reuters poll found that the rand was expected to trade 2 percent higher in a year as local economic reforms kicked in and supported the currency.
Corporate treasury manager at Peregrine Treasury Solutions, Bianca Botes, said the unexpected trade figures, coupled with a stronger global environment, saw the rand come under pressure, pushing it to levels weaker than R14.80 a dollar during the US session.
Botes said: “The dollar reached a 16-month high… as robust economic data continues to boost the greenback. With the rand trending toward euro performance, it is always interesting to see how a slump in the European common currency is reflected in the rand.”
At 5pm the domestic currency was bid 35c stronger than Wednesday’s same time bid at R14.46 a dollar. Against the pound the rand was 18c firmer at R18.72 and to the euro the currency strengthened 27c to R16.50.
TreasuryONE senior currency dealer Andre Botha said the miss on the trade data only increased the risk-off sentiment and the rand lost a bit of ground on the back of that.
“The main concern though for the Rand is the contagion effect that it can feel form the Chinese Yuan sliding against the US dollar. China is one of South Africa’s biggest trading partners and should things turn more negative in China it will only be a matter of time before it spills into South Africa,” said Botha.
Stocks extended gains as we enter the new month with the blue-chip Top40 index surging 2.42 percent to 47 256.71 points, while the broader all share index increased 2.27 percent to 53 578.76 points.
BUSINESS REPORT ONLINE
Source: iol.co.za
