The rand continued to regain lost ground against major currencies in late trade on Thursday‚ on improved risk appetite.
The local currency tested 8.20 against the greenback‚ boosted mainly by the 25-basis-point cut in interest rates by the Chinese central bank.
At 15:38 the rand was bid at R8.2224 to the dollar from Wednesday’s close of R8.3026. It was bid at R10.3737 to the euro from its previous close of R10.4397 on Wednesday and at R12.8081 against sterling from R12.8583 at its previous close. The euro was bid at US$1.2620 from Wednesday’s close of $1.2572.
“The rate cut has sparked a risk-on scenario‚ which is rand-positive. It is good for global growth prospects‚” said Mark Kalkwarf‚ senior portfolio manager at Iquad Group.
RMB said in a note earlier that it had adjusted rand forecasts to reflect the renewed eurozone stresses.
“We now expect high rand volatility over the next quarter‚ with USD/ZAR trading in a range of as much as 8.00–9.00. Risks over this period are to the topside. We expect the trend for rand gains to re-emerge when the eurozone tensions settle down‚ perhaps in the fourth quarter of 2012. Such a pattern would be consistent with previous periods of rand blowouts‚ where gains have typically resumed after four to seven months of extreme volatility.
“Our end-September and year-end forecasts for USD/ZAR are 8.30 and 7.80.” - I-Net Bridge