Johannesburg – The rand was stronger in afternoon trade on Friday on the back of a firmer euro.
“We have been looking to go back below R9 per US dollar most of the day. So far we have only managed that briefly‚ but given the strength of the euro against the US dollar it is only a matter of time‚” said a local currency dealer.
At 3.30pm‚ the rand was bid at R9.0077 to the US dollar from R9.0686 at Thursday’s close. The local currency was bid at R12.1177 to the euro from its previous close of R12.1190 and at R14.2231 against sterling from R14.3007 before.
The euro was bid at $1.3452 from Thursday’s close of $1.3367.
The euro tends to drive the rand exchange rate as it has the largest weight in the trade weighted rand at 34.82% compared with 14.88% for the US dollar‚ 12.49% for t5he Chinese yuan‚ 10.71% for sterling and 10.12% for the yen.
The euro briefly hit a 10-month high against the dollar in European trading hours Friday after the European Central Bank said euro-zone banks are poised to repay early 137.2 billion euros ($184.4 billion) in central bank loans.
The euro traded as high as $1.3470‚ its strongest level since February 29‚ before levelling off after 278 banks said they would repay the funds‚ highlighting the degree to which funding pressures have eased in the euro zone.
Although a national breakdown of banks repaying the super-cheap loans was not provided by the ECB‚ analysts said the overall amount to be repaid next week was close to what the market had expected.
Having borrowed more than EUR1 trillion from the ECB at the height of the euro-zone crisis in 2011-2012 via two three-year refinancing operations‚ banks will start repaying funds from the first of these operations January 30.
Also helping the single currency was strong German business confidence data‚ which suggested the eurozone's biggest economy is set to rebound from a fourth-quarter contraction‚ even as much of the bloc remains in recession.
The closely watched Ifo index rose to a seven-month high of 104.2 in January‚ from 102.4 in December‚ beating economists' forecasts of 103. - I-Net Bridge