Rand breaks 10/dollar level

Reuters

The rand has fallen through the psychologically important level of 10 to the dollar, with upbeat expectations about US jobs data expected later.

The rand weakened to 10.0145 per dollar in Friday's early trade and later gained some ground. By 6.44am GMT on Friday, the local currency had come back slightly to 9.9970, but still extended five days of losses that also dragged bonds lower.


"This move has been spurred by dollar strength, rather than rand weakness, although there is little domestically to offer traders any reason to go against greenback strength," said Christopher Shiells of Informa Global Markets.


But the rand was looking oversold and dealers said it could trade sideways until the release of US jobs data at 12.30pm GMT, which will give an indication of the health of the world's biggest economy, and in turn clues about quantitative easing.


Markets have been on edge amidst the suggestion that the US Federal Reserve will slow the taps on monetary stimulus that has supported emerging markets.


Investors were also expecting an upbeat US non-farm payrolls number, which will lend further support to dollar bulls and support views than the Federal Reserve may start to withdraw stimulus as early as September.


Upside expectations
​"We are not expecting the dollar-rand to see any upside beyond 10.100 at the moment," Shiells said.
The rand should find some support in the 10.07/08 region – a low hit on July 12.
Government bonds played catch up with the rand's fall, with the yield on the benchmark 2026 paper up 8.5 basis points to 8.26%.
The government is expected to announce higher fuel prices later in the session, drawing further focus on the weak exchange rate. – Reuters