The rand steadied at key support levels in early Friday trade, coming off previous two-week highs as a week-long correction seemed to lose momentum and pave the way for the currency to regain lost ground.
The rand was quoted at 6,8475 to the dollar at 0624 GMT, off a 6,83 close in New York on Thursday.
It has traded above key levels dealers had been watching, at 6,82/85, driven mostly by importer demand at these levels.
But momentum seemed to be stalling in early trade and dealers saw a potential retracement of this week’s moves.
“Good importer demand has seen the local unit trading above 6,82, and exporters have been taking advantage of the elevated levels to sell some dollars,” said Nedbank currency trader Brigid Taylor.
She added that momentum in the dollar’s favour was slowing and a move back to 6,65/dollar remained a medium-term target for the rand.
Analysts also see the rand’s failure to make a decisive break above 6.85/dollar as a signal that its bear-run against the dollar may be over, at least for now.
“That the rand stalled at or around the Fibo retrace level of 6,8500 simply raises the probability that the near-term move may have run its course,”
Research house Tradition Analytics said, adding signals were pointed to a defensive dollar and the local unit would likely find support heading into the weekend.
On capital markets, stocks looked set to open softer, with the JSE’s blue-chip June stock futures contract dipping 0,12% ahead of the bourse’s opening at 0700 GMT.
Government bonds were well supported by offshore buying interest on Friday. Yields on the four-year bondZ157 and the 2026 paper Z186 fell 4 and 4,5 basis points respectively.
The yield on the R157 was quoted at 7,78% and that on the 2026 at 8,795%.