The rand was a smidgen stronger in late trade on Wednesday with foreign investors preferring emerging market currencies to the euro‚ due to doubts mounting over Germany’s commitment to saving the euro.
Large exporters were fairly active in the local market with subsequent foreign currency payment inflows and continued inflows into the local bond market also leading the currency stronger.
“The main driver the past couple of days has been the upcoming EU summit on Thursday and Friday‚” a local trader said.
“The market is stronger and headline driven. We have seen quite a few large export today‚ the reason for the stronger rand and local bonds were also bought quite aggressively‚” the trader said‚ adding that the rand could reach R8.35 to the dollar in the short term.
“Markets are subdued ahead of the summit and no major move in the currency is expected‚” he said.
At 18:00 the rand was bid at R8.4181 to the dollar from its previous close of R8.4233. It was bid at R10.4835 to the euro from its previous close of R10.5208 and at R13.0798 against sterling from R13.1662 before. The euro was bid at US$1.2457 from its previous close of $1.2491.
South African bonds were firmer in afternoon trade on Wednesday on the back of a stronger rand.
“Our bonds have gained due to the stronger rand with the rand back below R8.40 per dollar‚ but still well short of breaking below R8‚” a local trader said.
The last time the rand was below R8 per dollar was on May 10.
At 18:00‚ the benchmark R157 bond was trading at 6.010 percent from Tuesday’s close of 6.060 percent. The R207 was bid at 7.170 percent and offered at 7.155 percent from a previous close of 7.225 percent and the R186 was trading at 8.010 percent from its previous close of 8.060 percent.