Rand Declines First Day in Four on Signals Gains Overdone
The rand weakened for the first time in four days against the dollar as investors bet the currency’s advance to a two-month high was overdone.
South Africa’s currency depreciated as much as 0.1 percent and traded less than 0.1 percent lower at 8.4562 per dollar by 9:05 a.m. in Johannesburg. The rand reached 8.4354 per dollar yesterday, the strongest since Oct. 4. Yields on benchmark 10.5 percent bonds due December 2026 were unchanged at 7.33 percent.
The rand has climbed 6 percent since reaching a three-and- a-half year low of 9.0092 on Nov. 21 as European officials eased terms for Greek aid and U.S. politicians took steps to resolve a budget standoff. The currency gained 1.1 percent yesterday after President Jacob Zuma was re-elected for a second term as president of the country’s ruling African National Congress and businessman Cyril Ramaphosa was elected deputy president, boosting expectations of more investor-friendly policies.
“Markets can be content in the knowledge that someone who understands business and the importance of delivery as playing a key role,” Quinten Bertenshaw, a Johannesburg-based analyst at ETM Analytics, said in e-mailed comments. “Technically, the rand finds itself at a crucial point.”
The rand’s relative strength index against the dollar was at 29.3 yesterday, below the 30 level that signals the currency is overbought.
A stochastic oscillator for the rand versus the dollar was also below the 30 threshold that signals the currency may have advanced too quickly and is poised to fall. The measure, which tracks the price of a security relative to its highs and lows during a particular period, has been below 30 since Dec. 12.
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