The rand traded in a fairly tight range at noon on Tuesday‚ ahead of major central banks’ announcements on interest rates this week.
“Until the markets get some sort of clarity about stimulus measures from either the European Central Bank and US Federal Reserve‚ we will continue to trade sideways‚” said Henry Flint‚ head of research at Thebe Stockbrocking.
At 11:52 local time the rand was bid at R8.2019 to the dollar from Monday’s close of 8.1875. It was bid at R10.0622 to the euro from its previous close of R10.0391 and at R12.8586 against sterling from R12.8643 before.
The euro was bid at US$1.2270 from Monday’s close of $1.2259.
Analysts at Standard Bank said the rand was likely to weaken to 8.60 the US dollar in the fourth quarter of 2012. “Our view is premised to a significant extent on our forecast of more US$ strength‚ a dire outlook for global growth and continued softness in commodity prices. The exchange rate remains more sensitive than most EM (emerging market) currencies to swings in global risk appetite‚ partly as the local currency market is comparatively liquid‚” they said in a note.
“Also‚ the authorities will not stand in the way of moves in the rand in either direction from a reserves management perspective‚ and the market thinks that another rate cut could be on the table.” - I-Net Bridge