JOHANNESBURG, Sept 7 (Reuters) – South Africa’s rand hit a
fresh two week high against the dollar on Friday, extending the
previous session’s gains as model fund traders sold the U.S.
currency for rand.
Risky assets rallied on Thursday after the European Central
Bank confirmed an unlimited bond-buying program to help stem the
euro’s debt crisis, pressuring traditionally safe haven assets
such as the dollar.
Investors who had shorted the rand for the past month sold
euro and dollars to get back into the domestic currency, which
was the biggest gainer early on Friday in a basket of 20
emerging market currencies traded against the dollar and tracked
by Reuters.
The rand rose to a session high of 8.2605 against
the dollar, off a close of 8.3010 in New York on Thursday, and
well below a key resistance level of 8.32 broken the previous
day.
Dealers who trade model funds normally come in at 0600 GMT
and buy or sell according to where the currency closed the
previous night.
“A close lower will indicate a dollar sell trigger to them
and that’s what we’ve just seen this morning,” said Standard
Bank currency trader Warrick Butler.
The rand also made gains on the euro as dealers sold
euro/dollar and then dollar/rand to get back into the local
unit, causing the rand to retrace from its recent fall.
“A close below 8.15/dollar, which is not our preferred bias,
would signal a bigger correction than we have been allowing
for,” said Judy Padayachee, technical strategist at Absa
Capital.
The unit was up 0.2 percent on the euro, near a
two-week high hit on Thursday evening. Euro/rand has lost 25
cents since last week Friday, dropping to 10.45 in this session.
Continued…
