SA FX AM: Rand trapped in a tight range

    Johannesburg, Mar 12 (I-Net Bridge) - The South African rand continued to trade in a tight range in the morning session on Friday, and lacking any clear direction.
     At 08:54 the rand was bid at 7.4165 to the dollar from 7.4057 at its previous close. It was bid at 10.1520 to the euro from its previous close of 10.1515 and was at 11.1506 against the sterling from 11.1682.
    The euro was bid at US$1.3702 from US$1.3685 previously.
    A local trader said: “We are set for another quiet day, in a range of 7.38- 46 against the dollar, with very little action expected.”
    RMB analysts in their morning report noted that with US retail sales and consumer confidence numbers out later today, the rand was set to languish at present levels through most of the day. “Remember that the key concern at the moment is whether US consumers will start spending again — you can’t think of much better data on this issue than today’s. Surprisingly positive data would of course help but with the poor February US weather such an outcome looks unlikely,” analysts John Cairns and Nema Ramkhelawan said.
    But RMB pointed to rand positives that may reassert next week. EPFR reports that emerging market funds saw record inflows last week. Similarly, BESA and JSE data shows that foreigners have pumped a huge R9.0bn into SA so far this month. US equity indices continue to push up slowly and are only 1% – 2% off their post-crisis high. Euro/US dollar is similarly within spitting distance of the 1.3727 high seen since the Greek concerns started to stabilise,” Cairns and Ramkhelawan said.
    The group noted that the Greek problems have still not been resolved, and the possibility of Chinese policy tightening also lingers following the very strong activity and inflation data yesterday. “More worryingly, the concern that the US and UK might block the US$3.75bn loan to Eskom continues to grow, with a South African government official yesterday suggesting that this could
lead to yet higher electricity tariffs and or renewed power shortages,” RMB concluded. 
    Dow Jones Newswires reported that the yen fell against the dollar and euro in Asia Friday as Japanese Prime Minister Yukio Hatoyama’s comments favouring a weaker yen prompted non-Japanese players to sell the currency.
    Growing expectations for further monetary easing by the Bank of Japan also weighed on the Japanese currency, dealers said.
  During the Asian morning session Friday, Hatoyama’s surprise comments caught the market off guard.
  Overseas financial crises “have brought about a strong yen that we don’t believe reflects the fact that Japan’s economic and industrial conditions aren’t strong enough,” Hatoyama said during a session of the Upper House budget committee. “I think we need to take firm steps against such yen strength.”
  He also said the yen’s recent strength is out of line with the country’s fragile economy, requiring the government to take “firm steps” including international corporation to deal with the currency.
    The greenback also gained support from speculation in financial markets that Japanese central bank may take further easing steps by ratcheting up money provision measures at its two-day policy meeting that ends next Wednesday.
    Dealers are sceptical that the yen will continue falling in the near future because there are orders from exporters to sell the dollar above Y91.00. Also, the euro is unlikely to climb above Y124.50 as players are focused more on whether uncertainty over Greece’s fiscal problem may dent investors’ confidence, dealers said.
    Against the dollar, the euro edged higher to $1.3694 compared with $1.3679 in New York overnight. The ICE Dollar Index, which tracks the greenback against a trade-weighted basket of currencies, was at 90.237 compared with 80.282.
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Bids: 08:54 local time         Range so far            Previous Close
      (06:54 GMT) 
 
Dlr/Rand         7.4164        7.3924-7.4360             7.4057    
Euro/Rand       10.1520       10.1393-10.1741           10.1515  
Sterling/Rand   11.1506       11.1447-11.1987           11.1682    
Euro/Dollar      1.3702        1.3668-1.3707             1.3685     
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By Gareth Vorster
I-Net Bridge.
Copyright 2010 I-Net Bridge. All rights reserved.

This entry was posted on Friday, March 12th, 2010 at 9:25 am and is filed under News. You can follow any responses to this entry through the RSS 2.0 feed.