Rand rallies after dollar takes a slip

THE RAND rallied to its firmest in one week yesterday, taking advantage of a slip in the dollar to push past key technical levels as investors took profits on the greenback’s recent gains.

At 2pm the rand was 0.64 percent firmer at 13.5900, easing slightly from a session-best 13.5300, the currency’s firmest level since June 27.

The rand was helped by a bounce in the euro, the currency of South Africa’s largest trade partner.

The euro was near three-week highs, boosted by strong German industrial orders and hopes prompted by a softening in US trade rhetoric towards EU car makers.

The rand broke through shortterm technical resistance at 13.60 and stopped shy of 13.50, the latter a level that unlocks a break towards 13.20, an attractive entry point for bearish investors betting on the currency’s long-term weakness.

Traders said the gains were therefore likely to be short-lived, with underlying sentiment towards emerging markets in general and South Africa in particular, still uneasy.

After the local market close, attention shifts to the release of Federal Reserve minutes, which could point to further US rate hikes, and Washington’s July 6 deadline for implementing tariffs on $34 billion of Chinese imports.

South African government bonds were firmer, with the yield on the benchmark instrument due in 2026 down 2.5 basis points to 8.725 percent.

On the bourse, shares were weaker, failing to follow European shares higher amid persistent worries about the domestic economy.

The Johannesburg Top-40 index was down 0.35 percent to 51,193 points, while the broader All-Share index fell 0.32 percent to 57,414.

Gold producers were among the decliners as spot gold slipped despite a weaker dollar as investors worried that the US Fed minutes would signal further rate hikes ahead.

Johannesburg’s gold mining index shed 0.56 percent to 1,077. – Reuters