JOHANNESBURG – The rand was hovering around R13/$ at the opening of local trade on Wednesday as the dollar battled to remain at the firmer levels it flirted with on Tuesday.
The dollar rebounded earlier on Tuesday as tension in North Korea eased and the effect of tropical storm Irma proved less disastrous than initially expected‚ but the currency later weakened ahead of the release of consumer inflation data.
The data may lead the US Federal Reserve to become even more dovish than it is already‚ after having increased twice this year.
Despite clear signs that economic growth is picking up in the world’s largest economy‚ inflation has remained stubbornly below the Fed’s 2% target.
The rand was set to exhibit short-term technical weakness‚ Momentum SP Reid analysts said.
“But losses were still likely to be initially muted‚” Momentum said.
At 9.04pm the rand was at R13.0284 to the dollar from R13.0091‚ at R15.5995 to the euro from R15.5671 and at R17.3554 to the pound from R17.2777.
The euro was at $1.1974 from $1.1966 after weakening to $1.1926 on Tuesday.
The rand has not reacted markedly to alarming tax data indicating that the Treasury was likely to miss its tax revenue target when Finance Minister Malusi Gigaba delivers his medium-term budget policy statement on October 25.
This might lead to further downgrades from ratings agencies as most have SA on a negative watch at present.
Moody’s said on Tuesday that a low-growth environment and weak business confidence had reduced the investment spending by corporates within SA as they were diversifying outside the borders of the country.