Rand consolidates at R14/$ level on inflation data as further weakness looms

The rand consolidated at the R14/$ level on Wednesday at midday as consumer inflation for July came in better than expected.

The consumer price index (CPI) fell to 6% from 6.3% in June‚ from an expected 6.1%.

The local currency remains vulnerable to further shocks following its sharp fall on Tuesday on reports of the imminent arrest of Finance Minister Pravin Gordhan by the Hawks.

At 11.30am‚ the rand was at R14.0158 to the dollar from R14.0007 on Tuesday. It reached an intraday weakest level of R14.1673/$ in the morning.

story_article_left1

The rand was at R15.8118 against the euro from R15.8303 previously‚ and at R18.5482 against the pound from R18.4778 previously.

The euro was at $1.1281‚ from $1.1307 at its last settlement.

The currency markets were awaiting new developments regarding Gordhan after the Treasury confirmed the receipt of a letter from the Hawks‚ asking the finance minister to present himself on Thursday morning.

Market expectations are for the rand to weaken substantially if Gordhan is arrested. But this could turn around should this not come to pass.

The level of R14.10/$ represented an important resistance level from where the rand firmed to R13.20/$ this month.

Standard Bank trader Warrick Butler said the local currency could weaken to R14.55-60 to the dollar‚ if it worsens past R14.10/$.

“If the rand breaks through R14.64/$ then we are back in the old doom and gloom situation‚ with the market contemplating R18/$‚” Butler said.

While the rand showed signs of consolidating against the dollar and euro‚ it remained weaker against the British pound‚ hitting the important resistance level of R18.65/£ in intraday trade.

- TMG Digital/BDlive