Newly printed one hundreded rand Mandela notes. File Picture: REUTERS
Newly printed one hundreded rand Mandela notes. File Picture: REUTERS

The rand was weaker at midday on Friday, after reaching a new two-and-half-year high against the dollar earlier, as a result of a weaker greenback environment.

The rand initially firmed following the Reserve Bank’s decision on Thursday to keep interest rates unchanged, but lost steam at the R12/$ threshold, as analysts said it could be overstretched at that level.

The Bank sketched a more positive picture on consumer inflation and GDP growth projections for the next few years. But despite the more dovish environment, the Bank remained cautious ahead of February’s budget statement and the expected Moody’s ratings review thereafter.

"The favourable inflation trajectory leaves room for modest monetary policy easing in upcoming months," Momentum Investments analyst Sanisha Packirisamy said.

Longer-term inflation expectations, surveyed in the fourth quarter of 2017, remain encouragingly within the 3% to 6% target band, she said.

At 11.30am the rand was at R12.1762 to the dollar from R12.1312. It reached a best intraday level of R12.0654.

The rand was at R14.948 to the euro from R14.8474 and at R16.936 to the pound from R16.8566.

The euro was at $1.2276 from $1.2239.

The dollar extended losses in Asia as the US congress appeared no closer to resolving a budget impasse that could lead to a government shutdown after Friday, Dow Jones Newswires reproted.

The risk of a shutdown "is optically bad" for the dollar, said Shahab Jalinoos, global head of currency strategy at Credit Suisse. "Investors are also conscious of how high US asset prices are right now."