The rand was stronger in morning trade on Tuesday trading off genuine dollar weakness, according to a local currency trader.

At 9am the rand was bid at 7.7498 to the dollar from its Monday night close of 7.8109. It was bid at 10.9560 to the euro from a previous 10.9843 and at 12.9720 against sterling from 12.9210.

The euro was bid at $1.4128 from $1.4072 overnight.

A local trader said: "We are looking at a level of 7.70 today, the last trading day of the month. Yesterday we saw genuine rand strength, but today I think we will trade on genuine dollar weakness."

Said RMB analyst Nema Ramkheawan in a daily report: "USD/ZAR continues to prosper around 7.80, acquiring support from its major short-term determinants. The overnight performance of EUR/USD, US equities and gold have bolstered the ZAR opening the door for further gains. We expect the unit to trade within a tight range of 7.75 - 7-90, as investors tread cautiously in anticipation of the US non-farm payrolls data on Thursday.

"We are spoilt for choice on the local data front with M3 money supply, PSCE, trade data as well as consumer confidence figures out today. Of particular importance is the contraction in the volume of new vehicle sales as well as the moderation in the Absa house price index, which suggests that the growth in mortgage advances is likely to have remained under pressure during the month.

"While the ZAR is generally immune to local data, the trade figures might generate a response. Keeping in mind that the trade data is rather unpredictable, we expect the balance to reflect a continued deterioration in export volumes and a slight moderation in imports. However, the volatility in the oil price is likely to have exacerbated import prices and hence widen the trade deficit for the month. A worse-than-expected outcome could possibly slow the ZAR's current momentum," Ramkheawan said.

Sapa

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