South Africa’s rand strengthened against the dollar early on Wednesday, moving further away from recent multi-month lows as dealers saw a reduction in central bank dollar-buying.
The rand fell to its lowest level this year last week amid reports the South African Reserve Bank (SARB) was aggressively buying dollars for its reserves purse, and in turn weakening the local currency.
At 0642 GMT, the rand was at 7, 1800 to the dollar, 0,29% firmer than its New York closing level of 7,2010 on Tuesday.
“Looking at the dollar/rand chart this morning confirms that for the first time since January 3 the upwards sloping dollar/rand trend has been broken to the downside,” analytics said.
The rand has fallen just over 8% since the start of the year but its 200-day moving average is pointing down, suggesting some gains are in store.
Analysts say a belief that the SARB has eased its buying dollars should make investors keen on the rand again. However, that in turn risks bringing the bank back into the market.
The bond market looked positive, with the strengthening rand providing some support.
The yield on the shorter-dated 2015 issue was trading a basis point lower at 7 855% while that on the 2026 note was down two basis points at 8,655%.
The JSE’s blue-chip March stock futures contract was up 0,32%, hinting at a positive start on the stock market at the 0700 GMT open.