Election won’t affect rand: Analyst

JOHANNESBURG – The rand remained firm in early trade on Monday, trading around R9 to the dollar ahead of the national elections today.

At 8.35am the rand was bid at R9,0100 from an overnight close of R8,9555.
It was bid at R11,6872 to the euro from a previous R11,6781 and at R13,2419 against the pound from R13,2043. The euro was bid at US$1,2980 from US$1,3044 overnight.
RMB analyst John Cairns said in his morning report that it’s election week in South Africa but, more importantly for the rand, it’s earnings week in the US as the reporting season hits full speed.
The US equity markets have managed six straight weeks of gains, encouraged by better data and earnings.
But the pace of gains has slowed markedly.
And the hurdle gets higher as earnings expectations increase, he said.
US data at least should support the conjecture that the worst of the recession is behind us – the pace of the decline in durable goods and house sales is likely to slowdown.
But the IMF is set to revise down its 2009 global GDP growth forecast (currently a 0,5%-1% contraction, which could be revised as far as a 1,5%-2% contraction) and warn of a prolonged recession in the full release of its World Economic Outlook today.
‘Caution is already the watchword this morning (Tuesday) as Asian stocks retreat, the yen strengthens on mounting risk aversion and dollar versus euro drifts towards a test of US$1,3000.
‘Rand versus dollar managed to finish last week under the nine rand level but it seems that the impetus is not yet there for a push even lower.
‘US earnings of course offer scope for major volatility, but for now look for a drift from 8,875 to above the nine level.
‘And if US equities and the rand falter, the reversal could be quite sharp.
‘The local election, while the focus for the country, shouldn’t affect the currency,’ he said.
-Business Report