The ZAR Exchange Rate Thread

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The rand was sharply weaker — above the key 7.40 per dollar technical level — in noon trade on Thursday amid rising risk aversion and growing worries that credit-ratings downgrades at major bond insurers could trigger another round of write-downs for investment banks.

By 12pm the rand was bid at 7.4298 to the dollar from its previous close of 7.3490. It was bid at 11.0190 to the euro from a previous 10.9230 and at 14.7677 against sterling from 14.6280 before.

The euro was bid at $1.4837 from $1.4856 overnight, while gold was quoted at $919.55 a troy ounce from its previous close of $928.15.

Dealers attributed the weakness in the rand mainly to general negative sentiment.

"There's just a lot of general negative sentiment towards South Africa at the moment which has been weighing on the rand for some time. There have been a lot of issues, including the recent Zuma issue and then the Eskom issue, which have been impacting negatively on the local currency.

"The rand has now broken the key 7.40 technical level with players buying dollars on the dips. The next key level is likely to be 7.60," a local currency trader said.

Dealers said markets had also been disappointed that the US Federal reserve had only cut interest rates by 50 basis points last night.

They added, however, that local producer price inflation which had come in just slightly higher than expectations had had little impact on the rand.

South Africa's producer price index (PPI) rose by 10.3 percent year-on-year in December from a 9.1 percent year-on-year increase in November, Statistics South Africa (Stats SA) data on Thursday showed.

The annual average for PPI in 2007 was 10.0 percent from the 7.7 percent recorded in 2006.

The PPI rose 0.5 percent on a monthly basis after November's monthly increase of 0.3 percent.

PPI was expected to be at 10.2 percent y/y in December from the 9.1 percent y/y increase in November, a survey of 12 economists by I-Net Bridge has found. Forecasts ranged from 9.8 percent y/y to 10.6 percent y/y.

Local markets are now awaiting trade data at 2pm today, followed by the Reserve Bank's rate decision shortly after 3pm.
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From iafrica.
 
iirc some economists said that the rand was going this route - they mentioned the R8 level.

no real surprise then
 
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MacNabs said:
And I have never seen the rand so low against the NZ Dollar before, looks like at the rate things are going we going to be able to afford a very nice holiday in CT in December.

1.00 NZD = 5.73835 ZAR :D:D:D
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24hours later... the Zuma/Eskom trend continues...
1.00 NZD=5.90965 ZAR

today my NZ$100 buys me R17.13 more than it did yesterday and R60.965 more that it did in the beginning of Jan.
 
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Rand back at 7.49 to the $ this morning. I wonder when it will break the 7.60 mark?
 
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