Category Investments

Currencies (17.6.04)

16 June 2004 Angelo Coppola

After opening weaker on Tuesday, the rand was looking a lot firmer across the board in late afternoon trade as the US dollar declined against its major rivals after tame US CPI data for May.

RMB AM reports that at 4pm, the rand was quoted at R6,5338 to the dollar from R6,6226 on Monday. It was quoted at R7,8877 to the euro from R7,9611 and at R11,9080 against sterling from R12,0110.

The rand opened weaker on Tuesday after Public Enterprises Minister Alec Erwin ruled out the privatisation of the major state-owned enterprises for the next five years even though his predecessor, Jeff Radebe, had set out a detailed timetable for privatisation in August 2000.

In addition, dealers said that the news that the American and Malaysian Strategic Equity Partners in Telkom were going to sell part of their stakes had also weighed on rand sentiment as about R6bn could flow out of SA.

However, the local currency bounced back strongly in the afternoon session after the dollar declined against its major rivals after a tame reading for core US consumer price data which was seen lowering the odds of aggressive Federal Reserve-rate hikes over the coming months.

The dollar rebounded sharply yesterday after being sold off the day before, aided by data showing a continued pick up in US economic activity.

Market participants said the dollar's slide the previous day, which was sparked by indications that inflationary pressures remained modest, was overdone.

On Tuesday, core consumer prices, excluding food and energy costs, rose just 0,2% in May, a reassuring sign despite a 0,6% jump in the overall consumer price index.

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