Rand looks at R7.60 to the dollar

The South African rand was range bound in the morning session on Tuesday against the dollar, however, it favoured the downside level of R7.60/$.

At 08.58am the rand was bid at R7.6422/$ from R7.6247/$ at its previous close. It was bid at R10.3261/€ from its previous close of R10.3368/€ and was at R11.3558/£ from R11.4040/£.

The euro was bid at S$1.3522 from $1.3560 previously.

A local currency trader said: "We expected some movement overnight, but nothing happened. The rand tested 7.60 against the dollar, but came off that level and is range bound this morning at 7.60-7.68.

If we break through that 7.60 level we could get to 7.55 against the dollar," he said, noting the strength of emerging market currencies at present.
RMB analysts said in their morning report that purchasing managers indices in the core economies are stabilising at high levels consistent with continued rates of economic growth (4% in the US, lower in Europe).

The indices for emerging markets, by contrast, generally continued to improve, and none more so than South Africa where the Kagiso index jumped to its highest level in almost three years at 60.4.

"As a result of the better data, emerging market currencies are suddenly outperforming, finally allowing US dollar/rand to make a much justified downside to 7.60, this despite the political concerns in the UK being yet another drag on the euro," RMB analysts John Cairns and Nema Ramkhelawan said.

“With all the positive news US dollar/rand should be heading lower, the problem (as always) is that continued euro/US dollar weakness constrains. US dollar/rand 7.60 as a result looks likely to hold for today, particularly given the lack of data or event risk," RMB said.