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Johannesburg — The rand rallied modestly yesterday, but stayed in a narrow range while the euro hit a new record high at $1.3336. At 5pm the rand was bid at its best level of the day at R5.7526 to the dollar, 2.34c stronger than at the same time on Monday. At one point it had weakened to R5.829, which represented a fairly tight range by its often volatile standards. Domestic economic data yesterday painted a mixed outlook for the rand in the longer term. South Africa’s economic growth rate quickened to 5.6 percent in the third quarter, its fastest rate in more than eight years, official data showed, dampening speculation that interest rates will be cut next week. High domestic rates are one factor behind the rand’s 15 percent gain against the dollar in the year to date, and so intact rates could keep it strong. Revised gross domestic product (GDP) figures going back six years also showed the economy was bigger than previously thought. But other data showed South Africa’s trade deficit widened sharply in October, raising the prospect of a current account deficit above 3 percent of GDP in 2004, which may put pressure on the currency down the road. Bonds were softer but yields remained near historic lows. Where they finish the year will largely hinge on whether the central bank trims rates next week. The yield on the R153 was bid 1.5 basis points softer at 8.26 percent. The yield on the shorter-dated R194 bond was bid 4.5 basis points weaker at 7.86 percent. In London, the euro hit a new record high of $1.3336 following publication of disappointing US consumer confidence data. It later eased from its peak to $1.331 compared with $1.3272 late on Monday in New York. The single European currency surpassed the previous peak of $1.3329 after news that US consumer confidence wilted for the fourth consecutive month in November, a worrying sign for the economy in 2005. The US consumer confidence index, compiled from a Conference Board survey, fell 2.4 points from the previous month to 90.5 — the lowest level since March. The dollar has been in the doldrums in recent weeks, as concerns over the US budget and current account deficits combined with talk that central banks around the world were reviewing the structure of their currency reserves away from the US currency. -Reuters-AFP
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