The rand was softer on Friday morning, trading just below the 8,00 per dollar level as global markets remained skittish and prone to further runs despite Germany’s vote to extend the powers of the eurozone rescue fund on Thursday.
At 8.45am, the rand was trading at R7,9892/$ from its previous close of R7,9770/$. It was trading at R10,7965/€ from R10,8430/€ before, and at R12,4385/£ from R12,4457/£ previously.
In a currency note, Rand Merchant Bank analysts John Cairns and Nema Ramkhelawan-Bhana said the dollar-rand exchange rate has been relatively stable for three days, trading between R7,78 and R8,00, but overnight dollar gains have seen the rand trading towards the top end as it tracked other risky currencies that have maintained a negative bias, despite the good performance of other risky assets.
"This is indicative of the continued stress in the system," Cairns and Ramkhelawan-Bhana said.
Standard Bank analysts Michael Keenan, Nomvuyo Guma and Shireen Darmalingam said the rand had weakened on increased global risk aversion and market volatility, which were a result of the deteriorating global growth outlook and sovereign debt crisis.
Rating agencies Fitch and Standard & Poor’s downgraded New Zealand’s credit rating this morning, and lower than expected global data, including "dismal" manufacturing figures out of China on Friday morning, had inflamed recession fears.
The country’s ranking was downgraded to double A from double A-plus over concerns about its growing foreign debt.
In China, the HSBC purchasing managers’ index, which previews business conditions in a range of industries before official output data, was at 49,9 in September, unchanged from August – contracting for a third consecutive month.
"This has seen Asian equity markets and commodity prices fall this morning," Keenan, Guma and Darmalingam said.
Cairns and Ramkhelawan-Bhana said gauging daily moves is little more than guessing at this stage, but the market seems happy around R8.00 against the dollar for now.
"Event risk comes mainly with this afternoon’s US personal and income spending figures, although markets are being driven by political noises rather than economic data," Cairns and Ramkhelawan-Bhana said.
Standard Bank said the rand could weaken further if the SA trade balance data, expected at 2pm today, indicates a further deterioration of the domestic current account and balance of payments. With Reuters and I-Net Bridge
