The rand was softer in early trade on Friday on importer demand.
“The rand has moved softer against the euro‚ so it is weaker against the crosses as well. We have seen some importer demand this morning‚ but if we move beyond 8.28 against the dollar we could see some exporter demand‚” a local trader said.
At 8.51am local time the rand was bid at R8.2567 to the dollar from Thursday’s close of R8.2198 and Wednesday’s close of R8.2140. It was bid at R10.2118 to the euro from its previous close of R10.1558 and at R12.9788 against sterling from R12.9241 before.
The euro was bid at US$1.2371 from $1.2355.
Absa Capital said in its morning report that after weakening back up to 8.29 per dollar yesterday morning‚ the rand recovered yesterday afternoon on some disappointing US housing and labour data‚ as the poor outcome of these data rekindled hope that another round of quantitative easing may still be possible from the US Federal Reserve.
“We had thought the rand would recover yesterday morning‚ after Chinese officials signalled that more monetary accommodation from the People’s Bank of China might be in the offing. However‚ while local rand bulls failed to respond to these announcements‚ they did eventually react to dismal US data and in so doing ensured that the local unit firmed into yesterday’s close and ultimately finished stronger on the day‚” the bank said.
“Although Asian markets are firmer this morning‚ the dollar has started to strengthen against the euro following hawkish remarks from some Fed officials overnight‚ which has ensured the rand is no longer recovering.
“Trading conditions look set to remain very volatile for the rest of the month as participants continue to wrangle over whether more stimulus is indeed in the pipeline in what remain thin trading conditions - due to the northern hemisphere summer. Amid all this volatility‚ our sense is that the rand will tend to strengthen (weaken) when the chances of another liquidity injection increases (decreases)‚” the bank concluded. - I-Net Bridge