THE rand was slightly softer at midday on Monday as it tracked the euro lower amid very quiet trade as it is a banking holiday in the UK.
At 11.52am, the rand was at R10.6912 against the dollar from Friday’s close of R10.6827. Against the euro, the rand was at R14.1142 from a previous close of R14.1158 and was at R17.7216 against the pound from Friday’s close of R17.7027. The euro was at $1.3203 from a previous close of $1.3190.
"The market will probably be lacklustre today with the rand a tad weaker. The rand fell below R10.70 to the US dollar this morning, but is a bit stronger now. It looks like the market has digested US Federal Reserve chairwoman Janet Yellen’s speech, which was delivered on Friday, and markets are quite confident that the US labour market will lead the US recovery higher," chief forex dealer at Bidvest Bank Ion de Vleeshauwer said.
In the keynote speech at the annual central banking symposium at Jackson Hole on Friday‚ Ms Yellen pointed to an improving US job market‚ but was noncommittal about how this progress would affect monetary policy.
"If the US jobs data continue to improve an interest-rate hike there could happen sooner than expected, supporting a bullish dollar and stopping the rand from strengthening significantly," he said.
"It is all about the US and when they are going to do anything. Europe is looking at quantitative easing (QE), while the US is looking at reducing QE: two diverging policies. The euro and pound have weakened and have fallen victim to the strong dollar. Continued weakness in the euro and pound can be expected, which will influence the rand," he said.
"If local interest rates continue to be raised, the rand will strengthen. The rand will be dependent on interest-rate decisions and the rand should maintain some level of stability," he said.
