The rand was under a lot of pressure in midday trade on Friday‚ continuing its weakening trend from the morning due to extremely volatile markets and negative global sentiment.
Comments by US Federal Reserve chairman Ben Bernanke on Thursday poured cold water on expectations of imminent stimulus measures‚ after he failed to commit to a third round of quantitative easing.
“There is extreme volatility in the markets and the volatility is likely to stay in the short term due to a lot of uncertainty in the eurozone‚” a local trader said.
At 11:26 the rand was bid at R8.4778 to the dollar from Thursday’s close of R8.3966. It was bid at R10.5630 to the euro from its previous close of R10.5495 on Thursday and at R13.0640 against sterling from R13.0361 at its previous close. The euro was bid at US$1.2464 from Thursday’s close of $1.2567.
Meanwhile Dow Jones reports that‚ adding further pressure to European financial markets‚ Italian industrial production data showed a 1.9% slump on the month in April‚ compared with expectations for a more modest fall of 0.5%. Italy’s FTSE Mib was 2.2% lower at 13‚247.93.
This data added to pressure on the euro‚ which tumbled to session lows. At 10:15 SA time‚ the euro was at $1.2474‚ weaker than $1.2561 late Thursday in New York. The dollar was at Y79.17‚ down from Y79.63.
A stronger dollar sent crude oil futures tumbling‚ with Nymex snapping its three-day winning streak in Asia‚ and commodity prices as a whole pushed lower.
The July Nymex crude futures contract was down $2.59 at $92.23. The Brent crude futures contract was $2.46 lower at $97.47. Spot gold fell $21.50 to $1567.90.
Elsewhere‚ UK manufacturers’ raw material costs saw their sharpest monthly fall in more than three years. Input prices fell 2.5% on the month in May‚ the largest monthly fall since December 2008 versus the 1.4% fall on the month in April. Following the data‚ the British pound was at $1.5412 from $1.5525 late on Thursday. The September gilt pushed higher‚ up 1.02 to 119.97. - I-Net Bridge