Rand rally runs out of steam

04 April 2016 - 11:48 By Colleen Goko
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The rand was slightly weaker against the dollar on Monday morning as the rally that began last week seemed to peter out.

Producer inflation jumped to 8.1% in February from a year before and 7.6% in January
Producer inflation jumped to 8.1% in February from a year before and 7.6% in January
Image: Foto24 / Loanna Hoffmann/ Gallo Images

Rand Merchant Bank analysts said direction for the day’s trade would be lacking.

“Event risk is relatively light during the week. Federal Reserve minutes out on Wednesday evening (will) be the dominant event. The rand outperformance of last week has probably run its course. Local optimism has been brought to earth by weekend events. Local politics remain in focus early in the week.”

The analysts said Monday’s African National Congress (ANC) working committee meeting and Tuesday’s parliamentary debate on the possibility of impeaching President Jacob Zuma were likely to have little effect on the currency.

At 8.37am‚ the rand was trading at R14.7406 to the dollar from R14.7321 at Friday’s close.

It was at R16.7820 against the euro from R16.7441 previously‚ and at R20.9468 against the pound from R20.9536 previously.

In other currency markets‚ the euro continued its upward march against the dollar‚ strengthening to as much as $1.1500‚ although it has since retreated slightly from the five-and-a-half-month high.

The euro’s strength comes amid the continued “bearish-dollar theme”‚ which was not affected by upbeat US data released on Friday‚ Dow Jones Newsiwres said.

Market participants believed the Fed was concerned about the fragility of the global economy and‚ therefore‚ would not dare to raise rates too quickly‚ the newswire said.

The euro was at $1.1382 from $1.1379 previously.

The greenback drifted lower to as low as ¥111.32‚ its lowest level since March 21‚ earlier in the session before rising slightly to ¥111.48 at about 4.50am GMT. That compared with ¥111.72 late on Friday in New York.

The WSJ Dollar index‚ a measure of the dollar against a basket of major currencies‚ was up 0.09% at 86.62.

– TMG Digital/BDlive

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