adminJOHANNESBURG —The rand resumed its weakening trend at midday yesterday after consumer price index (CPI) data met expectations. Barclays Research said in an early morning note that a higher than consensus print in CPI data could lift the rand.
“Considering the Reserve Bank’s vigilance concerning inflation, we think that the rand could benefit from renewed (local) rate hike expectations if the inflation print surprises in some manner to the upside,” said the research team.
Traders say that sentiment remains negative towards the local currency, which now weakens even in sporadic bouts of dollar softness.
Inflation increased as expected to 4,8 percent year on year in November from 4,7 percent year on year in October, Statistics SA data showed yesterday.
Although inflation remains well within the 3 to 6 percent target range, it has been increasing over the past few months. The Reserve Bank expects it to breach the target in the first quarter of next year.
At 11.28am the rand was at 14,6252 against the dollar from a previous close of 14,5972. It firmed to 14,54 yesterday morning after falling to a record low of 14,70/$ on Tuesday.
Against the euro the rand was at 15,9866 from 15,8984 and at 21,9963 against the pound from 21,9087.
The euro was at $1,0931 from a previous close of $1,0893.
TreasuryOne chief dealer Wichard Cilliers said commodity currencies such as the rand managed to recover some losses in Asian trade yesterday morning.
“The rand is among these currencies, managing to bring itself back to open at 14,58/$,” he said.
Although further gains would feel justified as the weaker levels are overdone, the build-up to the US Federal Reserve’s meeting next week, the risk-off sentiment and the commodity slump do not bode well for the local unit.
“A test of 14,65/$ again looks likely,” Cilliers said.—BDLive.
Online Reporter
derick.khumalo