Graphic: renjith krishnan

Johannesburg – The rand was slightly softer in early trade on Monday‚ on the back of a weaker euro.

“The good news is that we have kept below R9 per US dollar even though the euro is off Friday’s best level‚” a local currency dealer said.

At 8.34am‚ the rand was bid at R8.9624 to the US dollar from R8.9422 at Friday’s close and R9.0686 at Thursday’s close.

The local currency was bid at R12.0537 to the euro from its previous close of R12.0350 and at R14.1151 against sterling from R14.1187 before.

The euro was bid at $1.3456 from Friday’s close of $1.3465 and Thursday’s close of $1.3367.

The euro briefly hit a 10-month high against the dollar in European trading hours on Friday after the European Central Bank said eurozone banks were poised to repay early 137.2 billion euros ($184.4 billion) in central bank loans.

The euro traded as high as $1.3470‚ its strongest level since February 29‚ before levelling off after 278 banks said they would repay the funds‚ highlighting the degree to which funding pressures have eased in the eurozone.

RMB said in its morning report that there were lots of signs that the rand was oversold.

“But the trend has been so strong and relentless‚ and with sentiment so negative‚ we would prefer to wait for USD/ZAR to break below 8.88/90 before betting on a sustained recovery‚” the bank said.

“USD/ZAR9.08 was last week’s high‚ but there is a lot of talk of 9.12 being the key resistance level. A break opens up moves towards 9.20/30. Risks for a run remain but the move below 9.00 must have surely reduced the odds.

“With local issues being the predominant driver‚ watch out for Thursday’s December trade figures. Given the negative sentiment towards the rand‚ a negative surprise will have a pronounced impact.”

“We expect a decline in the deficit and think there is scope for a positive surprise given that December usually prints a surplus‚” the bank said. - I-Net Bridge