South Africa’s rand weakened yesterday, breaking above the 7.50/$ mark in quiet trading conditions. Local traders saw off shore fundmanagers selling rand for currency as the emerging market sentiment turned slightly bearish as the Dow Jones closed once again below the 10 000 mark with analysts cited a correlation between the Dow and emerging markets. Gold is down, euro back below 1.50 which will keep pressure on the rand. Traders will keep an eye on the mini budget this afternoon for future movements on the local unit.
The dollar eased against a basket of currencies on Tuesday, trimming some of the previous day’s sharp gains as investor selling of stretched higher-yielding currencies and the euro paused. The euro had its steepest drop since early August on Monday, falling nearly 1 percent, and the dollar index posted its best daily gain since September as investors unwound short dollar positions after a sharp fall in stocks and commodities. The euro drew some demand from Asian investors, recovering from the day’s lows, while the Aussie rebounded as some market players remained doubtful that the low-yielding dollar would strengthen further. But other traders said the dollar may rise more in the near term as short-term speculators take profits from their bets this year on risky assets with the approach of their business year-end, which typically comes in November.