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The rand trades close to R12.40/$ as investors worry about what tomorrow will bring

by , 04 June 2015

The rand has continued to ebb weaker this week. The local currency is now trading near three-month lows.

The latest slip by the rand relates to the release of US non-farm payroll numbers along with an announcement by Fitch about SA's credit rating tomorrow.

Let's take a closer look at what's going on…

The rand continues to slip weaker

The rand continues to rack up losses “against the dollar,” reports Fin24. Traders are treading with caution ahead of what tomorrow could bring and the impact on the local currency.

The rand is now trading at levels last seen on 18 March, adds Fin24.

Not helping the local unit out is a resilient dollar, says BDLive. The greenback benefitted from the release of a report detailing a “big improvement” in the number of jobs added in the US private sector. This showed an addition of 201,000 jobs last month.

Big risk events await the rand tomorrow

Tomorrow, credit ratings agency Fitch will decide whether or not to downgrade SA’s credit rating, notes MoneyWeb. This is putting downward pressure on the rand.

And there’s the release of the US non-farm payrolls data, adds BDLive. If this is better than forecast, it “would increase the chance of a rise in interest rates in the US sooner rather than later”.

A hike in US interest rates will be negative for the rand as investors will flock to the dollar for its higher, safer yield, shunning emerging market assets in the process.

Analysts at Rand Merchant Bank expect the rand to remain volatile until Monday, says BDLive.

At time of writing, the rand was trading at R12.38 to the dollar, R14.05 to the euro and R19.09 to the pound.

Once the outcome of Fitch’s review and US jobs numbers are known, the rand may benefit or weaken further.

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The rand trades close to R12.40/$ as investors worry about what tomorrow will bring
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