The rand was slightly firmer in midday trade on Monday; the local currency was still feeling the impact of the Lonmin violence from last week.
“The current bout of weakness in the rand is most readily ascribed to the Lonmin violence. As soon as this abates‚ I’m sure the rand will strengthen again‚ based on other current market indicators‚” said Mark Kalkwarf‚ a portfolio manager from Iquad.
At 11.30am local time the rand was bid at R8.2930 to the dollar from Friday’s close of R8.3127 and Thursday’s close of R8.2198. It was bid at R10.2497 to the euro from its previous close of R10.2651 and at R13.0255 against sterling from R13.0463 before.
The euro was bid at US$1.2361 from $1.2337.
“Investors are worried that the Lonmin violence spills over to other mines‚ which could affect the entire mining environment in SA. This would obviously be bad for mining production and therefore exports‚ thus the negativity towards the rand currently‚” Kalkwarf said.
“Notwithstanding the normal negative sentiment surrounding any death that may occur‚ the negative investor sentiment is what is driving the rand weaker. However‚ I do not expect the rand to breach the 8.35 level today. It should stay range bound within an 8.27-8.35 spread today‚ bar any unexpected comment that may emerge. A major market moving factor this week will emerge on Wednesday with the minutes of the last Fed meeting‚ where investors will be looking for signs of QE3‚” he said. - I-Net Bridge