Rand slips past R14.50/$ as dollar rally continues
The rand was weaker against major global currencies on Thursday afternoon, having now spent more than a week steadily losing ground against the dollar.
Upbeat US corporate-earnings reports, weak eurozone economic data, as well as investor interest in safe-haven assets have helped boost the dollar . On Thursday the world’s dominant reserve currency was trading at a two-year high against a basket of six other major currencies.
Global-growth fears in general were subduing activity on Thursday, with market focus on Friday’s release of US GDP data for the fourth quarter.
At 2pm, the rand had lost 0.54% to R14.5262/$, 0.29% to R16.1617/€ and 0.33% to R18.6987/£. The euro was 0.25% weaker at $1.1126.
The benchmark R186 government bond was bid at 8.62% from 8.56%.
The rand has depreciated 3.3%, or about 50c, to the dollar compared with where it was a week ago, with added pressure coming after last week’s announcement that Eskom had received a R5bn bailout from the government.
Despite this, the rand was only the fourth-worst performing emerging-market currency on Thursday, according to Bloomberg data.
In the current environment the bias is for further rand weakness, but the recent sell-off may be somewhat overdone and the local currency may stage a mild recovery, said Rand Merchant Bank analyst Nema Ramkhelawan-Bhana.
“Indeed, one-month implied volatility for the rand is still well below its six-month average, despite us drawing ever closer to what has been deemed the most highly contested national election in 25 years.”