The Rand had strengthened to 7.0325/dollar by 1035 GMT — trading at similar levels to Friday afternoon — in what some traders said was a realignment by domestic players after the Rand closed at 7.12/dollar in New York late on Friday.
“It’s been very illiquid, we’ve seen a few exporters selling dollars and the euro is a touch higher,” said one market watcher.
The euro — the currency of South Africa’s main trading partner, which the Rand often tracks — was bid at $1.246, barely changed from last week’s levels. The Rand was trading at 8.759/euro versus 8.791 late on Friday.
Traders said the domestic unit was likely to trade in a tight range between 7.02 and 6.96/dollar, with broader perimeters around the 7.20 to 6.95/dollar mark.
“If it breaks 6.95/dollar then it’s going to go much lower,” said one. Traders said they expected little significant movement in the euro before a meeting of G7 finance ministers and central bankers in Florida on February 6-7, who might give their political backing for a stronger dollar.
Bonds were largely static with the yield on the most-traded R153 due 2010, unchanged at 9.40 percent.
Dealers said it was likely to trade between 9.75 and 9.25 in the coming week.
The short-dated R194, due 2008, slipped three quarters of a point to 9.325 percent.
Traders said the market was in a state of flux, weighed down by perceptions that the Reserve Bank would keep interest rates on hold at its policy meeting on February 26-27, before raising them later in 2004.
The bank lowered its key repo rate by 550 basis points to eight percent during 2003, leaving the main lending rate at 11.5 percent — its lowest level in 22 years.
Forward rate agreements on the domestic market are now pricing in a series of interest rate hikes, with the first taking place in June.
