Johannesburg The rand raced to a near six-year peak versus the dollar on Friday, fuelling expectations of a possible interest rate cut in December after the US currency fell to another record low against the euro.
The rand firmed in intraday trade to R5.8525 a dollar in light volumes, a level last seen in mid-January 1999, according to Reuters data. By 5pm on Friday, the rand was at R5.8832 to the dollar.
But gains were short-lived as the dollar fought back from a $1.3329 record low against the euro, the currency of South Africas main trade partner.
«Its all a function of the weaker dollar,» said Dwyfor Evans, an emerging markets analyst at the Bank of America.
Analysts said the rand had also received a boost from comments last week by both Reserve Bank governor Tito Mboweni and finance minister Trevor Manuel that they would not fight its strength.
Although authorities had spoken against rand intervention, there was a chance that the central bank could cut interest rates in December to curb the rands strength, analysts said.
Government bonds have rallied, sending yields to record lows in anticipation of a half a percentage point cut in interest rates. The yield on the R153 weakened 5 basis points to 8.2 percent, while the yield on the R193 firmed 50 basis points to 7.76 percent.
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