* Rand has bullish start to the year
* Bond market still quiet, more movement expected in next
session
JOHANNESBURG Jan 3 (Reuters) – South Africa’s rand
firmed to a three-week high against the dollar in a bullish
start to the year, as investors unloaded dollars to take on risk
on Tuesday.
Government bonds barely moved and volumes remain thin as
players drifted back slowly to the markets after the end of year
holiday lull. Investors will likely take positions after the
government announces next week’s auction plans in Wednesday’s
session.
The rand was firming for the fourth day on Tuesday
and traded as strong as 8.02 against the dollar, levels last
seen on December 8. It was up 0.7 percent from its previous
8.0750 close in New York trade.
“So far we’ve opened pretty much risk on. I think that’s
more a factor of guys wanting to take profits on dollar long
positions,” said Oliver Alwar a trader at Standard Bank.
“If you look at market positioning, the markets have been
short euro for quite some time but going into year end and at
the start of the year we’ve seen people lightening on dollar
long positions, that’s why we’ve seen a weaker dollar.”
The dollar made about 22 percent worth of gains on the rand
in 2011, making the rand one of the worst performing emerging
market currencies.
Dealers expect volatility to remain a challenge this year
while Europe’s debt crisis persists and makes any rand gains
difficult.
Continued…
