Wednesday, 21 September 2011 - 20:00
S.African rand tumbles, tipped to hit 8.00/dollar soon
By Phumza Macanda
JOHANNESBURG (Reuters) - South Africa's rand tumbled nearly 3 percent to hit 16-month lows against the dollar on Wednesday as importers piled into the greenback, spooked by a recent trend of sharp declines that dealers said would continue.
At 1520 GMT, the rand was trading at 7.8720 to the dollar, 1.7 percent weaker than Tuesday's New York close of 7.74 and having hit 7.9650, its weakest since May 2010.
With over 5 percent of losses so far this week, the rand was on track to register its biggest weekly decline since May 2009.
"Importers .... are panicking and any order is moving the market aggressively," said Ion de Vleeschauwer, dealer at Bidvest Bank.
The rand has broken through several key technical levels this week and will likely hit 8.00 to the dollar soon.
"We have hit 7.9650 already so I think 8.00 could come under pressure and not hold. Sentiment for the short term has turned very bearish," said Judy Padayachee, a technical analyst at Absa Capital who sees it at 8.10/8.20 over the next few days.
"All my daily and weekly indicators are screaming the rand is oversold, but I have to ignore that and look at the price action, which shows it is under pressure and the trend is still weaker for now."
The rand was also at its weakest levels since January 2010 against the euro and sterling.
A reprieve is unlikely in the short term given investors are shunning risky positions in view of the deepening debt crisis in the euro zone.
The sharply weaker rand has created a monetary policy headache for the South African Reserve Bank as it tries to make a trade-off between rising inflation and weak growth.
But the central bank is still expected to keep its repo rate unchanged at 5.5 percent when it announces a decision on borrowing costs on Thursday.
Data showed earlier that annual headline inflation was steady at 5.3 percent in August but it is expected to rise gradually over the next few months and peak at 6.3 percent in the first quarter of 2012.
Government bonds firmed after the CPI data, which was softer than expected, with the yield on the 2015 bond down two basis points to 6.85 percent on the day and that on the 2026 issue falling by the same margin to 8.395 percent.
For now, money markets are still pricing in a small chance of a rate cut over the next few months, with the 6x9 FRA (forward rate agreement) rate at 5.21 percent on Wednesday after rising to 5.4 percent on Tuesday.
But analysts say the inflation outlook has deteriorated and instead of a rate cut, rates will be stable for longer.
Wed, 21 Sep 2011
World Markets (Spot Prices)
|JSE Top 40||17:00||27996.23||-47.43||-0.17%|
|JSE Indust 25||17:00||27823.88||-164.24||-0.59%|
|Rand / Dollar||19:58||7.8920||0.1788||2.32%|
|Rand / Pound||19:55||12.3278||0.2067||1.71%|
|Rand / Euro||19:55||10.8712||0.2880||2.72%|
|Rand / NZD||19:57||6.4418||0.0872||1.37%|
|Rand / AUD||19:55||8.0700||0.1364||1.72%|
|Yen / Dollar||19:58||76.3100||-0.1100||-0.14%|
|Euro / Dollar||19:55||0.7254||-0.0041||-0.56%|
|Dollar / Euro||19:58||1.3773||0.0078||0.57%|
|Pound / Dollar||19:55||0.6374||0.0022||0.35%|
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|Index Name||RP||Move||% Move|
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|Industrial Metals ||27,581.18||-83.91||-0.30%|
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|Personal Goods ||430.87||6.90||1.63%|
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Latest Consensus Changes**
|FSR||FIRSTRAND LIMITED||BUY||19 Sep|
|NPN||NASPERS LIMITED||BUY||19 Sep|
|NED||NEDBANK GROUP LTD||HOLD||16 Sep|
|SBK||STANDARD BANK GROUP LIMIT...||SELL||16 Sep|
|AIP||ADCOCK INGRAM HLGS LD||HOLD||16 Sep||
|Expected||Company Name||Fin. Date|
|22 Sep 2011||FORBES||August 2011 (Interim)|
|22 Sep 2011||HARDWARE||June 2011 (Final)|
|22 Sep 2011||KGMEDIA||June 2011 (Final)|
|22 Sep 2011||PALLINGHT||June 2011 (Interim)|
|22 Sep 2011||PALLINGHTM||June 2011 (Interim)|
|PSGFIN PREF||11-09-01||11-09-16||11-09-26||R 3.4024|
|RACP||RECM - Calibre Ltd||22/09/2011||Confirmed|
|COLP||Colliers South Africa Holdings Ltd||22/09/2011||Confirmed|
|COL||Colliers South Africa Holdings Ltd||22/09/2011||Confirmed|
|RACC||RECM - Calibre Ltd||22/09/2011||Confirmed|
|BSS||BSI Steel Ltd||23/09/2011||Confirmed||
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