Rand stronger due to softer greenback

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IOL world currency1 Graphic: Renjith Krishnan.

The rand was firmer at noon on Tuesday as a result of a weaker dollar.

“We are at the mercy of politicians’ comments. If you look at the euro/rand‚ Aussie/rand crosses‚ there have not been any major moves there‚ but the greenback is softer and therefore the rand strengthened‚” a local trader said.

However‚ Standard Bank said its call for continued strengthening of the dollar kept the bank’s forecast for the rand relative to the dollar tilted to the weaker side over three to six months.

“We also expect that it will take more bouts of financial distress to get eurozone politicians to make the tough choices‚ which means that the rand will remain vulnerable to sporadic bouts of risk aversion‚” the bank said.

At 11.59am local time the rand was trading at R8.2655 to the dollar from Monday’s close of R8.3197. It was trading at R10.2550 to the euro from its previous close of R10.2714 and at R13.0222 against sterling from R13.0688 before.

The euro was bid at US$1.2408 from $1.2350.

Meanwhile‚ the euro remained solid versus the dollar‚ as investors continued to believe that the European Central Bank would step in to intervene in markets to help fiscally frail eurozone countries‚ Dow Jones Newswires reported.

“At present‚ euro/US dollar direction remains dominated by investor expectations regarding the ECB and European politicians‚” said Credit Agricole Corporate & Investment Bank. “Given this skewed sensitivity‚ even the expectation of ECB policy delivery in the next few weeks should be sufficient to keep the euro buoyant into early September.” - I-Net Bridge

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