Rand holds gains, but still seen vulnerable

JOHANNESBURG – South Africa’s rand held onto earlier gains against the dollar on Friday as investors squared positions after recent selloffs but lingered near three-year lows and was still seen vulnerable.

The rand, recovering from an extended period of tumult among emerging markets and worries around the local current account deficit, was expected to consolidate ahead of US payrolls data on Friday and a domestic interest rate decision next week. Most recently the rand has also been pressured by softer commodity prices.”More than anything else it’s position squaring ahead of the weekend …It’s likely today with a Friday that we could see the rand strengthen on the back of profit taking,” said Colen Garrow, an economist at Brait.”The predominant view seems to be soft (US) data is expected, which means a dollar depression, which may give the rand a boost – but it would be very temporary.The sentiment is still negative toward our currency.”At 0700 GMT the rand the rand was trading at 7,7685/US$.It closed at 7,8075 in New York after sliding as far as 7,97/US$ earlier this week – its weakest since June 2003.Many traders and analysts had predicted the rand could test 8/US$.Domestic government bonds firmed in step with a slightly firmer rand.Yields on the most traded R153 bond due 2010 were steady at 8,71 per cent, while yields on the benchmark R157 due 2015 eased by 4,5 basis points to 8.64 per cent.Nampa-ReutersMost recently the rand has also been pressured by softer commodity prices.”More than anything else it’s position squaring ahead of the weekend …It’s likely today with a Friday that we could see the rand strengthen on the back of profit taking,” said Colen Garrow, an economist at Brait.”The predominant view seems to be soft (US) data is expected, which means a dollar depression, which may give the rand a boost – but it would be very temporary.The sentiment is still negative toward our currency.”At 0700 GMT the rand the rand was trading at 7,7685/US$.It closed at 7,8075 in New York after sliding as far as 7,97/US$ earlier this week – its weakest since June 2003.Many traders and analysts had predicted the rand could test 8/US$.Domestic government bonds firmed in step with a slightly firmer rand.Yields on the most traded R153 bond due 2010 were steady at 8,71 per cent, while yields on the benchmark R157 due 2015 eased by 4,5 basis points to 8.64 per cent.Nampa-Reuters