Rand makes rapid turnaround
November 7, 2006
By Jacqueline Mackenzie
Johannesburg - The rand was firmed sharply in early trade on Tuesday, boosted by a slightly firmer euro, a recovery in emerging market currencies generally and comments by the IMF that were considered positive for the local currency.
At 10.00am, the rand was bid at R7.2950 to the US dollar from Monday's close of R7.3810. It was bid at R9.3125 to the euro from a previous R9.3514 and at R13.8950 against sterling from Monday's R13.9620.
The euro was bid at $1.2755 from $1.2731 late Monday, while gold was quoted at $625.14 an ounce from $623.29 overnight.
"It's basically moved on the euro. We briefly broke below 7.27 earlier, which caused a bit of chaos, but essentially we have moved into a 7.25 to 7.35 range for now," said a local currency trader.
ETM analysts said in their morning commentary that the US dollar versus rand has now cracked some key technical resistance at R7.27 which if sustained would open the door for a larger and more significant reversal. The move appears to be in line with what has been seen across other emerging markets and commodity currencies.
"A move back below 7.20 would even confirm a test of levels back to 7.00 in due course, however a close below 7.26 would be required before we would feel comfortable targeting lower," they noted.