Johannesburg The rand was tucked in a narrow range yesterday amid disappointment with the euros failure to test fresh record peaks against the dollar after a weekend Group of 20 (G20) meeting offered the greenback no lifeline.
The rand briefly firmed to R5.985 per dollar, and by 5pm was bid at R5.991 a dollar, more than 2c firmer than its level at the same time on Friday.
«Traders are becoming increasingly sceptical on the outlook for the dollar in the short term, with many surprised that the euro has not broken to a new high given the lack of support for the dollar by the G20,» said George Glynos, a market analyst at ETM.
G20 policy makers made no mention of the dollars slide in a communique issued at the end of their meeting in Berlin, reinforcing the view that major nations have accepted the need for a weaker dollar to correct the US trade gap.
The dollar had eased only slightly against the euro by 5pm in Johannesburg. It was bid at $1.3044 per euro, moving back within half a cent of record lows hit last Thursday.
Glynos said that although the local market was short of dollars, traders were not keen to liquidate long rand positions.
«The appetite for further short dollar positions in the short term is not particularly strong. Against that backdrop you have got global fundamentals which favour a weaker dollar,» he said.
«Although short-term technical factors suggest the dollar could recover, traders remain reluctant to buy back into the dollar, leaving the market a little undecided at the present.»
Inflation data due tomorrow and Thursday were unlikely to have a major impact on the rand, with the market already pricing in a 50 basis point interest rate cut at the central banks December 8 and 9 policy meeting.
Bond yields weakened yesterday after last weeks rally, but 4Casts Caroline Gorman said a shortage of paper was likely to cap further losses if inflation data came out higher than expected.
«The recent move down in yields, motivated by growing December cut expectations, has left some traders scrambling for stock,» said Gorman.
At 5pm the yield on the R153 bond was bid 6 basis points weaker at 8.35 percent, after having hit a record of 8.25 percent last Thursday. The yield on the 194 was bid 2.5 basis points weaker at 7.9 percent.
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