adminJohannesburg – The rand strengthened through R11/$ in early morning trade yesterday, but analysts warn the local currency remains vulnerable to the stronger dollar.
The rand shrugged off negative news on Monday, including lower oil prices and global rating agency Moody’s cutting Japan’s sovereign rating to A1 from AA3. At 8.28AM the rand was at 10,9977 to the greenback from Monday’s close of 11,0007.
The rand was at 13,7068 against the euro from 13,7109 and was at 17,2902 against the pound from 17,2986.
The euro was at $1,2466 from a close of $1,2468 previously.
Analysts said the widening of the trade deficit, announced on Friday, cast a shadow over the prospects of the local currency.
“It implies that the current account balance will be seeing little to no relief and when capital inflows aren’t adequately accelerating to account for this the correcting mechanism is typically found in the rand,” chief currency dealer at Bidvest Bank Ion de Vleeschauwer said in a note.
He said rand losses in the short term have not been all that strong and year-to-date the trade-weighted performance is still somewhat neutral (-0,4 percent).
“But it does warn of a high degree of vulnerability to shifting offshore conditions, particularly those surrounding the strengthening of the dollar,” De Vleeschauwer said.-BDlive – AFP
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