[miningmx.com] — THE rand weakened against the dollar on Thursday and looked set to hit a new year low above R7.50/dollar while bonds also extended this week’s losses.
The rand was trading at R7.4299 to the dollar at 06:47 GMT, 0.47% weaker than Wednesday’s New York close of R7.3950.
In an article in Financial Mail, Reserve Bank Governor Gill Marcus all but ruled out aggressive currency intervention to weaken the rand, and said there was not guarantees such steps would work.
Such talk is supportive of the rand and it is off session lows of R7.4825 hit earlier.
But, charts suggest the rand’s bearish trend is intact for now. It has been weaker than its long term moving average for two weeks and is just an inch within this year’s low of R7.50.
The rand has attempted twice this week to test R7.50.
“Another failed attempt to break above this level would however raise the prospect that the dollar/rand will gradually start to respond to the weakening dollar index and loss in dollar strengthening momentum. We retain the view of being nervous to be long on dollars,” ETM said in a note.
Exporter interest has been strong at levels above R7.40 and might cap sharp rand losses.
On fixed income, bonds have sold off this week as the rand has weakened. The yield on the 2015 bond went up three basis points to 6.99% and that on the 2026 issue rose two basis points to 8.345%
