Rand tad firmer vs US dollar

The rand was slightly firmer against the dollar in noon trade in a volatile market.

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The rand was slightly firmer against the dollar in noon trade on Tuesday in a volatile market.

“Up to now the session has been dominated by volatility and uncertainty with no clear market trend,” a local rand trader said.

“Gold is off by about US$20 and that's no help either,” he added.

The trader said that nothing contained in the SA Reserve Bank's quarterly bulletin had influenced the currency market.

At 11:47 local time, the rand was bid at 7.3838 to the dollar from its previous close of 7.4025. It was bid at 10.0500 to the euro from 10.1015 before, and at 11.6320 against sterling from 11.7199 previously.

The euro was at US$1.3611 from US$1.3658 before.

Earlier the SA Reserve Bank reported that SA's current account deficit had widened to -R95.4 billion or -3.3% of GDP in the second quarter compared to -R87.8 billion or -3.1% of GDP deficit in the first quarter.

Standard Bank analysts said in a morning note on Tuesday that the rand had been victim again to heightened global risk aversion yesterday.

“Risk-off sentiment is being fuelled by the deepening debt crisis in Europe associated with the growing possibility of a Greek default, and this is prompting many participants to liquidate their emerging market exposures in favour of cash and safe-haven assets.

“Yesterday's rand weakness was particularly severe, as the rand underperformed all of its emerging market and commodity-based currency peers, which ensured that most of our short-term targets were attained in just one trading session.”

Standard Bank said that although the rand had recouped some of yesterday's losses this morning, a return to R7.49 or even R7.52 was still possible this week because when global risk aversion bit, a liquid and deep EM currency such as the rand (with no exchange controls for foreign investors) was particularly vulnerable.

“The dismal SA consumer confidence data published yesterday was also conducive to a weaker rand from a GDP differential perspective.”

Meanwhile the euro maintained its volatility following what Dow Jones Newswires called “a disappointing Italian bond auction.”

The Italian Treasury sold a total of EUR6.485 billion Treasury bonds, or BTPs, at an auction Tuesday, the Bank of Italy said.

The Treasury offered EUR3 billion to EUR4 billion of the 2016-dated BTP, and a combined EUR2 billion to EUR3 billion of the three other non-benchmark, or “off-the-run” BTPs.

The 2016-dated BTP was a new issue, while the others are re-openings of issues launched in 2008, 2004 and 2010, respectively. - I-Net Bridge

Source: http://www.iol.co.za/rand-tad-firmer-vs-us-dollar-1.1136584

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