* Rand rallies as investors sell the euro
* 8.20-22/dollar is next resistance, 8.50 support still
holds
JOHANNESBURG, Sept 6 (Reuters) – The rand hit two-week highs
against the euro and dollar on Thursday after the European
Central Bank failed to deliver enough details on its bond-buying
plans to quell debt crisis concerns, pushing investors who had
shorted the rand back to the unit.
The rand strengthened 1.2 percent against the euro
to 10.46 from 10.60 a day earlier, and climbed 1.7 percent to
8.2750 against the dollar, making it the top emerging
market currency performer versus the dollar and tracked by
Reuters.
They quickly got out of their long euro positions in late
afternoon trade in a knee-jerk reaction after the ECB policy
meeting gave investors few clues about the bank’s plan to stem
the euro debt crisis.
“We didn’t see much that was new from the meeting itself,
but I take it the confirmation for some in the market that they
actually are going to be engaging in this unlimited spree of
bond-buying has given a bid tone to EM currencies,” said Sean
McCalgan, market analyst for ETM.
Investors were selling both euro/dollar and dollar/rand to
buy back rand, which they had been taking short positions in
since early August.
“It’s a combination of the euro dropping and then the
unwinding of the crosses after the announcement of the bond
programme, which will be good for emerging markets as a whole,”
said Ion de Vleeschauwer, dealer at Bidvest Bank.
The rand would need to break through the 8.20-22 region to
entrench the rally, a level it bounced off 12 times in the last
two months.
Continued…
