THE rand regained ground on Friday afternoon but still remained a little softer compared with Wednesday’s closing levels.
The local currency weakened earlier in the day to R8.16 to the dollar after China’s disappointing trade balance data re-ignited market concerns about the strength of the world’s second biggest economy.
At 3.45pm local time the rand was bid at R8.1090 to the dollar from Thursday’s close of R8.0793; at R9.9331 to the euro from its previous close of R9.9415 and at R12.6387 against sterling from R12.6290 before.
The euro was bid at $1.2248 from $1.2303.
China’s trade surplus in July came in narrower than expected at $25.1bn from $31.7bn in June, falling short of a median $35.2bn forecast by economists in a Dow Jones Newswires survey.
Exports rose 1% in July from a year earlier, worse than June’s 11.3% rise and below economists’ median forecast of a 8% expansion. Imports rose 4.7% from a year earlier, down from the 6.3% rise in June.
"The (China) trade data has put pressure on risky assets. Commodity-based currencies such as the rand will struggle to strengthen given signs of anaemic economic growth in that country," said Mike Keenan, sub-Saharan currency strategist at Absa Capital.
Standard Bank analysts said in a note that they would stick with the bearish side of consensus, targeting R8.60 to the US dollar in the fourth quarter 2012. This, to a significant extent, is based on their stronger-than-consensus dollar call.
"We have kept the rand at 8.60 through first quarter 2013, consistent with our call regarding the timing of the strongest point for the dollar versus the euro," the analysts said.
"There is some security surrounding flows through the local currency market, in the short term, provided by World Government Bond Index inclusion on October 1, but we would not be surprised to see a correction in local bonds and the rand shortly after this deadline. Our end-Q3:12 (third quarter of 2012) target sits at 8.30 to the dollar," they said.
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