THE rand was weaker on Friday morning amid indications the currency could soon commence another bout of weakness.
The rand has failed to convincingly break through R11 to the dollar‚ with negative emerging-market sentiment dampening the currency’s short-term prospects.
At 8.50am‚ the rand was at R11.0325 to the dollar from Thursday’s close of R10.9984.
Against the euro‚ the rand was at R15.1258 from its previous close of R15.0958 and was at R18.3561 to the pound from R18.3366 on Thursday.
The euro was at $1.3715 from $1.3720 at Thursday’s close.
Barclays Research said in an early morning note that the currency was still feeling the fallout from the disappointing Chinese manufacturing purchasing managers index (PMI) data released earlier in the week.
“The rand also weakened due to Wednesday night’s US (Federal Reserve’s) hawkish federal open market committee minutes and ongoing sociopolitical tensions in Ukraine.”
Lingering domestic strike activity and tight supply conditions were also putting pressure on the rand‚ Barclays said. It had at times bounced back‚ but this had proven to be unsustainable.
“Our sense is that the rand is once again looking vulnerable to extended weakness in the near term‚ especially after some stale short rand positioning was cleaned out during the recent bout of rand short covering‚” Barclays said.
Short covering means the actual buying of a currency in which a short position was held by a trader on the view the currency would weaken. © BDlive 2014