Rand softer against US dollar

The rand was softer against the dollar in volatile noon trade as it followed a jittery euro and as risk aversion dug in its heels.

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The rand was softer against the dollar in volatile noon trade on Thursday as it followed a jittery euro and as risk aversion dug in its heels.

“The euro and the rand are all over the place but dollar rand hasn't yet gone beyond 8.10,” a local currency trader said.

“However, the euro has lifted a little after comments following the release of a document clarifying the European Financial Stability Facility (EFSF)'s stance on buying bonds,” the dealer added.

At 11:36 local time, the rand was trading at 8.072 to the dollar from its previous close of 8.0383. It was trading at 11.1387 to the euro from 11.0667 before, and at 12.7216 against sterling from 12.6769 previously.

The euro was at US$1.3796 from US$1.3762 before.

Standard Bank currency strategists said in a note that the rand's weakening drift resumed yesterday afternoon after its brief bout of strength on Tuesday following better-than expected US corporate earnings news.

“The poor sentiment due to China's disappointing Q3:11 GDP data and the lack of an imminent solution to the eurozone debt crisis are still weighing down the rand.

“The IMF's downbeat assessment of SA's short- to medium-term growth prospects likely also contributed to the rand's slide.”

In addition, SA consumer price inflation overshooting expectations had diminished expectations of an interest rate cut at the November MPC meeting.

“In our view, a repo rate cut would be rand-positive as it might encourage inflows into the SA bond and equity markets which have recently experienced large withdrawals by non-residents. Thus, reduced interest rate cut expectations were likely also a factor in the rand's slide. With no tier one local data today, the rand remains at the mercy of global sentiment which, if Asian markets and commodity prices are anything to go by, is still risk-averse.”

Meanwhile Dow Jones Newswires reported that in European trading hours on Thursday, currency traders turned more positive after a press report reaffirmed previous news that the eurozone's bailout fund, the EFSF, would have the ability to purchase sovereign debt directly from countries issuing new bonds or on the open market.

The euro climbed against the dollar while other sentiment-linked currencies such as the Australian and New Zealand dollars as well as the Canadian dollar also notched up gains against the greenback. - I-Net Bridge

Source: http://www.iol.co.za/rand-softer-against-us-dollar-1.1161284

Kazakhmys United States Short breaks Peter Atherton Florida Sunderland