The rand ended off its intraday worst level on Monday, having lost the most in more than a week in exaggerated moves in a thin market with US markets closed for the Martin Luther King Day holiday.
The local currency fell as much as 1.6% in intraday trading, touching its weakest level of R17.12/$ as a “lack of liquidity with the US being out of the market putting the rand under pressure,” said TreasuryONE chief dealer Wichard Cilliers.
“The rest of the emerging market space has also been under pressure, but the rand is leading the way as load-shedding and the cost to the economy is worrying investors.”
IG senior market analyst Shaun Murison said the rand is highlighting some short-term risk in the marketplace after what has been a relatively strong start to the year. “The domestic currency is reflecting some weakness in key commodity export prices, from the likes of copper, gold and platinum group metals.”
At 6.42m, the rand had recovered but was still 0.87% weaker at R16.9948/$, 0.76% softer at R18.3895/€ and gave up 0.8% to R20.7298/£. The euro was 0.11% weaker at $1.082.
“Today’s underperformance in the rand while not entirely clear could also be some recognition of the dire economic impact load-shedding has had and is continuing to have on the domestic economy,” Murison said.
“Technically, the rand has been trading firmly into overbought territory and looks to be correcting from these levels,” said Murison, adding that short-term momentum suggests that R17.40/$ could be the near-term target for the domestic currency.
The JSE closed weaker with global peers mixed — having spent most of the session relatively firmer. The all share index lost 0.21% to 79,167 points and the top 40 eased 0.2%. The precious metals and mining index fell 2.08%, resources shed 0.53%, retailers were down 0.46%, banks declined 0.27% and industrials were 0.11% in the red.
In Europe, the UK’s FTSE 100 gained 0.21%, France’s CAC added 0.34% and Germany’s DAX advanced 0.38%.
This week, market participants will get insights into local inflationary pressures when the December consumer inflation data is released on Wednesday. CPI is expected to show a slight moderation in the annual rate relative to November.
Gold lost 0.3% to $1,913.80/oz, while platinum gained 0.54% to $1,067.79/oz. Brent crude was 1.42% weaker at $84.15 a barrel.
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