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Johannesburg — The rand was off a four-month peak versus the dollar yesterday, hit by a bout of profit taking and importer demand, traders said. It earlier firmed to R5.95 a dollar — its best level since July 20 — after the euro set another record high against the greenback. At 5pm the rand was bid at R6.0312 to the dollar, compared with R5.9837 on Wednesday. «At the R5.95 a dollar level there was good demand for dollars, lots of profit taking … the market was short. We saw model-type funds buying, and importers taking advantage of the lower levels,» said a London-based trader. «The dollar has bounced back against most currencies and the rand was looking a bit over extended below R6 a dollar.» The dollar hit a record low against the euro and fell to a seven-and-a-half-month low against the yen as expectations mounted that the world’s economic powers will do little to halt the greenback’s decline. Analysts expect little action from a meeting of Group of 20 finance officials that will start in Berlin today, particularly after US treasury secretary John Snow said on Wednesday that market intervention was «non-rewarding at best». By 4pm the dollar had reversed its losses against the yen and was trading almost unchanged on the day at ´104.21 after hitting a low of ´103.66. Against the euro, it stood below closing New York levels, at $1.3008. The rand has been buoyed in past days by broad dollar weakness and the government’s reiteration that it had no plans to intervene, allowing the market to continue to determine the exchange rate. The rand’s 11 percent rise versus the dollar so far this year has pressured the profit margins of exporting companies. But its strong run has renewed hopes that the central bank will cut interest rates by at least 50 basis points at the December monetary policy committee meeting. This has pushed bond yields down by up to 25 basis points since late last week to successive records. Earlier yesterday, the yield on the benchmark R153 rallied to 8.25 percent before later retracing to 8.32 percent bid by 5pm. That represented a weakening of 2.5 basis points on the day. By 5pm the yield on the R194 was unchanged on the day at 7.87 percent bid, after rallying to 7.82 percent. The rand’s move below R6 to the dollar «has obviously been the key driver of gains in the last two days, fuelling expectations that a 50 basis points cut is possible in December», said Caroline Gorman, an analyst at 4Cast in London.
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