JOHANNESBURG: South Africa's rand fell through the psychologically important level of 10 to the dollar in Friday's early trade, with upbeat expectations about US jobs data that comes out later in the session bolstering the greenback.
The rand had weakened to 10.0145 per dollar and later gained some ground. By 0644 GMT on Friday, the local currency had come back slightly to 9.9970, but still extended five days of losses that also dragged bonds lower.
"This move has been spurred by dollar strength, rather than rand weakness, although there is little domestically to offer traders any reason to go against greenback strength," said Christopher Shiells of Informa Global Markets.
However, the rand was looking oversold and dealers said it could trade sideways until the release of US jobs data at 1230 GMT, which will give an indication on the health of the world's biggest economy, and in turn clues about quantitative easing.
Markets have been on edge on when the US Federal Reserve will slow the taps on monetary stimulus that has supported emerging markets.
Investors were also expecting an upbeat US non-farm payrolls number, which will lend further support to dollar bulls and support views than the Federal Reserve may start to withdraw stimulus as early as September.
"We are not expecting the dollar-rand to see any upside beyond 10.100 at the moment," Shiells said.
The rand should find some support in the 10.07/08 region- a low hit on July 12.
Government bonds played catch up with the rand's fall, with the yield on the benchmark 2026 paper up 8.5 basis points to 8.26 percent.
The government is expected to announce higher fuel prices later in the session, drawing further focus on the weak exchange rate.
National Treasury will hold a sale of inflation-linked bonds at 0900 GMT, where demand is expected on the longer-dated paper, and Treasury Bills at 1000 GMT.
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