Rand Drops Further Vs. the Dollar
The rand fell sharply during the weekend rocking the investor sentiments. Losing 30c vs. the dollar, the Rand plunged to its lowest with a gloomy image that the currency may further weaken in the coming weeks. The South African bonds faces substantial loss in value as the rand weakened.
Inshaan Omar a trader with Standard Bank said the change in the market was definitely a reflection of the wave of US financial data as well as hopes from various sources that said there could be an increase in the US interest rates as the Federal Reserve is hinting towards it.
According to Mr. Omar, technical analysis signals that the Rand would further weaken to R14.45/$.
Last month the US employers added 271,000 jobs at a seasonally adjusted rate which surpassed the expectations of 182,000. Even for August and September, the figures were revised up painting a rosy picture. The higher than predicted numbers enhance the scope for the Fed to consider an increase in the near zero interest rates.
In a note, Barclays Research analysts said they expect a rate hike in December. Earlier, the expectations were more fixed to an increase in March next year.
Barclays said, "The October payroll report was very solid and exhibited broad-based strength." It added, the payroll suggested "US labor markets had fully rebounded after slowing in August and September."
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