South Africa's Rand Flat, Seen Weaker on Firm Dollar

Posted 05 January 2007 @ 08:06 am EET     Print     Reprint     E-Mail     Comments

JOHANNESBURG (Reuters) - South Africa's rand was flat versus the dollar on Friday, still above the key 7/dollar level and market players were not optimistic the local unit will bounce back in the near term if the dollar continues to firm.

The rand was at 7.11 against the dollar at 0650 GMT, little moved from its New close on Thursday. "The dollar remains stronger across the board, and we expect pretty much the same thing today. We'll be stuck in the 7.05-7.15 ranges," said Danny Pienaar, a currency trader at Nedbank.

The dollar rallied this week on the back of several data that eased expectations of an interest rate cut in the U.S., which market players said would be negative for the greenback.

Traders said the local unit's weakness is likely to persist through next week as metals prices are also under pressure.

"While commodities including gold remain on the weak side, we expect further pressure on emerging markets and a possible move (of the rand) to 7.20," said Pienaar.

Spot gold -- of which South Africa is a major producer and exporter -- was at $623.30/4.00 earlier, continuing its slide from one-month highs of $640 earlier in the week.

The market will be watching the U.S. non-farm payroll report due later on Friday, the most closely watched barometer of the U.S. labour market which will determine the dollar's near term direction.

Government bonds were also little changed on Friday, with yields on the R153 paper due in 2010 rising three basis points to 8.12 percent while those on the benchmark R157 maturing in 2015 were unchanged at 7.69 percent.