The rand was steady in quiet early trade on Monday despite concern that fallout from the violence at Lonmin’s Marikana mine could spill over into other mining companies‚ dealers said.
“We have had a quiet start to the week but traders are nervous as we do not know what the impact of Marikana will be‚” a local trader said.
At 8.44am local time the rand was bid at R8.3276 to the dollar from Friday’s close of R8.3127 and Thursday’s close of R8.2198. It was bid at R10.2849 to the euro from its previous close of R10.2651 and at R13.0779 against sterling from R13.0463 before.
The euro was bid at US$1.2357 from $1.2337.
RMB said the rand had been weighed down by the struggles in other high-yielding currencies and by some sharp relative underperformance.
“The weekend should have softened both factors so maybe we can break the aggressive trend of weakness that persisted through last week. Resistance is at last week’s highs of 8.3650 on USD/ZAR and 10.30 on EUR/ZAR‚” the bank said.
“The rand’s underperformance on Friday can most easily be ascribed to the Marikana mine shooting. It made international news in a big way and we received inquiries from our offshore clients.
“Friday’s foreign portfolio activity data in the bond and equity markets will tell us more. To the extent that it has affected‚ we should expect a lingering impact that slowly drops away‚” it said.
“The struggle of the high-yielding currencies complex‚ to which the rand belongs‚ remains a puzzle. Global equities keep hitting records and typical risk indicators such as the VIX ‘fear gauge’ index of implied volatility is at levels last seen pre-crisis‚” it concluded. - I-Net Bridge