Bronwyn Nortje and Madeleine van Niekerk
THE rand fell to its lowest levels since March 2008 in early morning trade following the release of the minutes of the Federal Open Market Committee meeting on Wednesday night.
The minutes revealed that Federal Reserve officials were "comfortable” with plans to start tapering monetary stimulus in 2013 should the US economy improve.
Failed wage talks in the gold sector added to the currency’s woes after the National Union of Mineworkers (NUM) said discussions at the Commission for Conciliation‚ Mediation and Arbitration (CCMA) did not yield satisfactory results. The union is threatening to embark on widespread strike action starting on Monday.
The domestic currency depreciated as much as 0.5% overnight on Wednesday‚ smashing past the key R10.36/$ resistance level to trade as high as R10.4435/$ before recovering to around R10.30/$.
"After the US Federal Reserve minutes last night‚ emerging markets came under pressure again and commodity currencies fell on a stronger US dollar‚” Bidvest Bank chief forex dealer Ion de Vleeshauwer said.
He noted that‚ apart from China‚ currencies of the Brics countries — Brazil‚ Russia and India — were "all suffering” along with the rand.
"India’s rupee is trading at record lows and the Aussie dollar is down. It is a bit of a mess‚ with our currency being pushed weaker‚” he said.
"We are in the strike season and gold-mining strikes are a possibility. These local issues are spurring more speculation against the rand. There is nothing fundamentally supporting the rand and we could see R10.50/$ before the rand retraces again‚” he said.
The release of a Chinese purchasing managers index figure of 50.1‚ which beat median estimates‚ helped to bolster the rand in midday trade. However‚ the currency remains vulnerable to sudden shocks.
China is the biggest buyer of raw material from South Africa.
Standard Bank rand trader Warrick Butler said emerging-market currencies remained on "very thin ice” as a shift towards developed markets continued.
"Any country that has had strong international investment into their government bond market has been hurt as real-money investors look to hedge their yield investments through the currency markets‚” he said in a note.
The rand has depreciated as much as 19% in 2013 and is the worst performer of 24 emerging-market currencies monitored by Bloomberg.
According to Nedbank Capital‚ the rand is likely to remain under pressure with a strong focus on the outcome of wage talks‚ particularly in the mining sector.
At 12.12pm the rand was trading at R10.33 to the dollar‚ R13.75 to the euro and R16.08 to the British pound. © BDlive 2013