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S.Africa rand steadies vs dlr after heavy losses

By on November 18, 2009

South Africa’s rand steadied on Wednesday after falling sharply against a resurgent dollar on Tuesday and should now focus on international market trends after the central bank left domestic rates unchanged.

The rand fell to an 8-day low of 7.54 against the dollar on Tuesday, tracking a weaker euro and also weighed down by the possibility that the central bank could surprise the market by cutting the key repo rate.

By 0641 GMT, the currency traded at 7.4535 against the dollar, just 0.18 percent weaker compared than Tuesday’s close at 7.44.

Some players had speculated that the Reserve Bank, which together with the government has expressed concern the rand’s gains this year could hurt the economy, might lower rates to reduce the currency’s appeal.

But new central bank Governor Gill Marcus announced no change in the repo, dismissing political pressure to cut.

“I think the Governor’s statement yesterday was very prudent and will go a long way towards bringing some confidence back into the system,” said Nedbank head of trading David Gracey.

“She did allude to the fact that the rand is too strong and we’ll have to wait and see how that debate will play out, but for now I think we will just focus on international factors.”

The JSE securities exchange’s blue-chip Top-40 December futures contract slipped by 0.15 percent, ahead of the market’s open at 0700 GMT.

Government bonds extended the previous day’s losses, with the yield on the 2015 bond up 2.5 basis points at 8.4 percent and that on the 2036 bond rising 3.5 basis points to 8.755 percent.

Reuters.

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