The rand was slightly stronger in early trade on Tuesday from its close on Monday as traders eye South African gross domestic product data for direction.
“Trade conditions were thin yesterday due to the UK public holiday. In fact‚ yesterday marked the lowest trade volumes for the year to date‚” Absa Capital said in its morning report.
“Nonetheless‚ the rand continued to exhibit a weakening bias in relation to the dollar and the euro‚ which was in keeping with the broad-based pullback in risky assets that has crept back into the market ahead of much-anticipated policy signals from the from the US Federal Reserve and the European Central Bank during the Jackson Hole symposium later in the week‚” it said.
At 08.01am local time on Tuesday the rand was bid at R8.4189 to the dollar from R8.4381 at Monday’s close. It was bid at R10.5086 to the euro from its previous close of R10.5492 and at R13.2867 against sterling from R13.3227 before.
The euro was bid at US$1.2488 from $1.2502 at Monday’s close.
“This risk aversion implies that a growing number of participants may be pricing in the possibility of the upcoming meetings proving to be a disappointment or ineffectual‚ especially in terms of addressing the lingering European Union crises‚” the bank said.
“The fact that nonresidents started to sell R182m worth of South African bonds last week did not help the rand’s cause either.”
“That all said‚ given that many participants are opting for the sidelines ahead of all the event risk in September‚ we need to be careful about drawing too many conclusions from current market conditions‚” Absa Capital said. - I-Net Bridge