Rand rockets to 4-month peak

JOHANNESBURG – South Africa’s rand roared to a four-month month peak early yesterday, spurred by broad US dollar weakness and further gains in the price of gold, with traders predicting the trend would hold.

At 0650 GMT the rand was trading at 6,18 versus the greenback after rising by 1,9 per cent overnight to briefly touch 6,1650 – its strongest level since September 5, according to Reuters data. “It’s gold and euro strength – there’s a lot of dollar weakness,” a local dealer said.”All commodity currencies are fairly strong this morning but the rand is outperforming a bit – and it looks like this can go further.”So far this year the local unit has appreciated by about 2,7 per cent against the US dollar, after giving ground against the US currency in 2005 and ending a sustained three-year rally which has eroded the competitiveness of South African exports.Dealers said the rand clocked up most of its gains in thin trade overnight, after breaking key support levels at 6,28/US$ and then at 6,21/US$.This signalled a possible move to 6,05/US$, and then 5,90/US$, they said.Gold hit a three-week peak above US$535 an ounce as fund buying intensified on yesterday, with investors predicting a test of US$540,90 an ounce – bullion’s best price since December 12, and a 25-year peak at that time.South Africa is the world’s biggest producer of gold, although it only accounts for a fairly small percentage of its exports.A stronger euro also pushed the rand higher, with the single currency surging to US$1,2080.The euro often sets direction for the rand as it is the currency of South Africa’s main trade partner.Domestic government bonds rallied, with yields diving to record lows on the back of gains in the rand and speculation that there may be scope for the central bank to cut interest rates at its next policy meeting in early February.The yield on the most-traded R153 due 2010 plunged eight basis points to 7,235 per cent, while the yield on the benchmark R157 bond due 2015 fell seven basis points to 7,39 per cent.-Nampa-Reuters”It’s gold and euro strength – there’s a lot of dollar weakness,” a local dealer said.”All commodity currencies are fairly strong this morning but the rand is outperforming a bit – and it looks like this can go further.”So far this year the local unit has appreciated by about 2,7 per cent against the US dollar, after giving ground against the US currency in 2005 and ending a sustained three-year rally which has eroded the competitiveness of South African exports.Dealers said the rand clocked up most of its gains in thin trade overnight, after breaking key support levels at 6,28/US$ and then at 6,21/US$.This signalled a possible move to 6,05/US$, and then 5,90/US$, they said.Gold hit a three-week peak above US$535 an ounce as fund buying intensified on yesterday, with investors predicting a test of US$540,90 an ounce – bullion’s best price since December 12, and a 25-year peak at that time.South Africa is the world’s biggest producer of gold, although it only accounts for a fairly small percentage of its exports.A stronger euro also pushed the rand higher, with the single currency surging to US$1,2080.The euro often sets direction for the rand as it is the currency of South Africa’s main trade partner.Domestic government bonds rallied, with yields diving to record lows on the back of gains in the rand and speculation that there may be scope for the central bank to cut interest rates at its next policy meeting in early February.The yield on the most-traded R153 due 2010 plunged eight basis points to 7,235 per cent, while the yield on the benchmark R157 bond due 2015 fell seven basis points to 7,39 per cent.-Nampa-Reuters