Rand firms as investors sell greenback

THE RAND firmed to a threeweek high against the dollar in a bullish start to the year yesterday, as investors unloaded dollars to take on risk.

At 5pm, the local currency was bid at R8.0348 to the dollar, 5.21c firmer than on Monday.

Government bonds barely moved and volumes remained thin as players drifted back slowly to the markets.

“So far we’ve opened pretty much risk on. I think that’s more a factor of guys wanting to take profits on dollar long positions,” said Standard Bank trader Oliver Alwar.

“If you look at market positioning, the markets have been short (of) euro for some time, but going into year-end and at the start of the year we’ve seen people lightening on dollar long positions, that’s why we’ve seen a weaker dollar.”

Dealers expect volatility to remain a challenge while Europe’s debt crisis persists and makes rand gains difficult.

Yields on government bonds were little changed.

Going into the year “the global risk environment – especially how the euro debt situation pans out, the local inflation trajectory and any sign of growth recovery” are likely to be the main themes on the South African bond market this year, HSBC Bank fixed income strategist Di Luo said.