JOHANNESBURG – South Africa’s rand was firmer against the US dollar late on Friday, having swung more than one per cent in both directions during the session in a reflection of the volatility on global financial markets.
The rand was at 7,40 versus the US dollar at 1523 GMT, a gain of 0,54 per cent from New York’s Thursday close of 7,44. The domestic unit earlier firmed to 7,3205/USdollar and fell as low as 7,5850 at the opposite end of the range.”It has been a choppy session for the rand, which has generally taken its lead from the global mood,” said Lucy Bethell, emerging market strategist at RBS in London.Some of the rand’s later gains came after the US Federal Reserve cut the discount rate by 50 basis points in an attempt to provide more liquidity to the financial system.”They are basically making it easier for guys that need cash to borrow, so banks and funds who are in trouble in the US now have easier access to funds so that’s why the rand has appreciated,” said Ion de Vleeschauwer, dealer at Bidvest Bank.The rand should in the short term continue to derive its direction from sentiment in global markets, which have seen an uptick in risk aversion linked to US credit market woes.”At this stage it’s hard to tell exactly how long the global mood will remain more positive,” Bethell said.”The risk is that we get more bad news from the financial sector and personally I think the rand has got amongst the weakest fundamentals in this (emerging markets) region and remains sensitive to global risk aversion.”Government bonds were also firmer, with yields on the most-traded R153 issue maturing in 2010 easing 7,5 basis points to 9,26 per cent from Thursday’s close and those on the benchmark R157 bond due in 2015 down nine basis points at 8,475 per cent.Nampa-ReutersThe domestic unit earlier firmed to 7,3205/USdollar and fell as low as 7,5850 at the opposite end of the range.”It has been a choppy session for the rand, which has generally taken its lead from the global mood,” said Lucy Bethell, emerging market strategist at RBS in London.Some of the rand’s later gains came after the US Federal Reserve cut the discount rate by 50 basis points in an attempt to provide more liquidity to the financial system.”They are basically making it easier for guys that need cash to borrow, so banks and funds who are in trouble in the US now have easier access to funds so that’s why the rand has appreciated,” said Ion de Vleeschauwer, dealer at Bidvest Bank.The rand should in the short term continue to derive its direction from sentiment in global markets, which have seen an uptick in risk aversion linked to US credit market woes.”At this stage it’s hard to tell exactly how long the global mood will remain more positive,” Bethell said.”The risk is that we get more bad news from the financial sector and personally I think the rand has got amongst the weakest fundamentals in this (emerging markets) region and remains sensitive to global risk aversion.”Government bonds were also firmer, with yields on the most-traded R153 issue maturing in 2010 easing 7,5 basis points to 9,26 per cent from Thursday’s close and those on the benchmark R157 bond due in 2015 down nine basis points at 8,475 per cent.Nampa-Reuters
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