Rand see-saws after initial euphoria

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IOL world currency1 Graphic: Renjith Krishnan.

The rand advanced to the strongest level against the dollar in three months in intraday trade yesterday as metals rose after US legislators passed a bill that averted spending cuts and tax gains. However, it gave up the gains later in the day to end below R8.50.

“In the short term we have seen the rand strengthen on the back of the fiscal cliff news‚” Vunani Private Clients global market analyst Kuziva Muganiwa said of early morning trade. “Investors are taking this opportunity to increase their appetite for equities.”

The rand has strengthened 5 percent against the dollar in the past month, the best performance out of 25 emerging market currencies monitored by Bloomberg.

The rand gained as much as 0.6 percent to R8.4110 against the dollar in early trade.

By noon the rand was flat after the initial euphoria of the US averting the fiscal cliff waned, and it was bid at R8.5068 at 5pm.

“For now, the mood is more upbeat and this is reflected in risk assets generally,” said Quinten Bertenshaw, an analyst at ETM Analytics.

“The rand is not benefiting from the risk-on trade given the extent of its gains in the prior month.”

The agreement was “good news for emerging-market currencies, equities and possibly commodities”, he said.

The Standard & Poor’s GSCI index of raw materials rose for a second day.

South Africa’s benchmark stock index climbed to a record, led by commodity producers including BHP Billiton and Anglo American.

Copper for delivery in three months was up 2.5 percent to $8 130 a ton on the London Metal Exchange.

Lead rose as much as 2 percent to $2 376.50 a ton, the most expensive since September 2011. – Bloomberg

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