SA rand holds weaker

JOHANNESBURG – South Africa’s rand was weaker yesterday as the dollar held gains against key currencies, with analysts predicting further easing if the unit breaks through 6,79/dollar level.

At 0620 GMT the rand was trading at 6,75 per dollar compared to 6,74 at close on Friday. Technical analysts said 6,79/dollar level was a pivotal area, which if breached could see the rand testing 6,84 and then 6,94 before marching to 7.”Fundamentally the rand is not looking too rosy, given the drop in precious metal prices and growing optimism of further monetary easing before year end,” said Michael Keenan, a markets analyst at Econometrix Treasury Management.An unexpected decision about two weeks ago by the central bank to cut its repo rate by 50 basis points to 7,50 per cent has seen the rand depreciate by about eight per cent against the dollar.The rate cut has reduced the rand’s yield appeal to foreign investors.”There is definitely a weaker rand bias, but it all depends on whether the 6,79/dollar level holds,” said Keenan.The dollar extended gains yesterday after U.S. economic data eased concerns that surging oil prices may have hurt growth, keeping expectations alive for more rises in interest rates.Still, traders said they expected the dollar’s gains to be limited this week, with many waiting on US jobs data due on Friday to determine their stance on the currency.The euro hovered at three-week lows around US$1,2004/07.A drop below key support at US$1,1968 would carry it to its lowest level in 2 months.South African government bonds were soft after last week’s rally sparked by benign inflation data.Yields on the benchmark R153 bond due 2010 were up five basis points at 8,92 per cent while yields on the R194 due 2008 rose 4,5 basis points to 8,47 per cent.-Nampa-ReutersTechnical analysts said 6,79/dollar level was a pivotal area, which if breached could see the rand testing 6,84 and then 6,94 before marching to 7.”Fundamentally the rand is not looking too rosy, given the drop in precious metal prices and growing optimism of further monetary easing before year end,” said Michael Keenan, a markets analyst at Econometrix Treasury Management.An unexpected decision about two weeks ago by the central bank to cut its repo rate by 50 basis points to 7,50 per cent has seen the rand depreciate by about eight per cent against the dollar.The rate cut has reduced the rand’s yield appeal to foreign investors.”There is definitely a weaker rand bias, but it all depends on whether the 6,79/dollar level holds,” said Keenan.The dollar extended gains yesterday after U.S. economic data eased concerns that surging oil prices may have hurt growth, keeping expectations alive for more rises in interest rates.Still, traders said they expected the dollar’s gains to be limited this week, with many waiting on US jobs data due on Friday to determine their stance on the currency.The euro hovered at three-week lows around US$1,2004/07.A drop below key support at US$1,1968 would carry it to its lowest level in 2 months.South African government bonds were soft after last week’s rally sparked by benign inflation data.Yields on the benchmark R153 bond due 2010 were up five basis points at 8,92 per cent while yields on the R194 due 2008 rose 4,5 basis points to 8,47 per cent.-Nampa-Reuters