Rand rallies to end 7-day losing streak

Johannesburg - The rand rebounded from seven days of declines on Tuesday, rising the most among major and emerging-market currencies, as technical indicators suggested to some traders that the currency’s fall to a record this week was overdone.

The currency gained 0.8% to R16.6407 per dollar by 12:38 in Johannesburg on Tuesday, reversing an earlier decline of as much as 1%. That trimmed losses this year to 7%, the biggest retreat among the 31 emerging-market and major currencies tracked by Bloomberg.

“Liquidity conditions are quite thin,” Ricardo da Camara, a market analyst at ETM Analytics, said by phone from Johannesburg. “Looking at technical indicators it has been pushed quite far, but it’s not to say it can’t do that again.”

The rand’s relative strength index was above the 70 level for a fifth day on Tuesday, suggesting to some traders the currency is oversold and poised for a rebound.

The rand plummeted as much as 9% on Monday, the most in more than seven years, in Asian trading amid reduced demand for emerging- market assets. Such flash crashes will probably become more common in foreign-exchange trading as liquidity shrinks amid tighter regulation and reduced demand for emerging-market assets, according to Insight Investment Management and Citigroup.

The currency’s gains on Tuesday could be attributed to “profit taking in a very thin market,” Jim Bryson, a currency trader at Rand Merchant Bank in Johannesburg, said by phone. “It will remain thin until a bit more certainty returns to the market.”

Volatility in the rand versus the dollar surged toward the highest level in four years, while a measure of global currency price swings climbed to the most since October.

The difference between prices at which traders are willing to buy and sell the rand, used as a gauge of liquidity, was about 1.5 times wider on average in the past six months than it was during the first half of 2015, according to data compiled by Bloomberg.

ZAR/USD
17.00
(-0.36)
ZAR/GBP
21.21
(-0.30)
ZAR/EUR
19.12
(-0.30)
ZAR/AUD
11.81
(-0.62)
ZAR/JPY
0.16
(-0.21)
Gold
1774.43
(-0.02)
Silver
18.05
(+0.69)
Platinum
807.99
(+0.12)
Brent Crude
42.92
(+2.64)
Palladium
1914.00
(+1.46)
All Share
54521.90
(-0.17)
Top 40
50179.89
(-0.26)
Financial 15
10150.02
(-0.64)
Industrial 25
76554.73
(+0.52)
Resource 10
50138.02
(-1.24)
All JSE data delayed by at least 15 minutes morningstar logo
Company Snapshot
Voting Booth
Please select an option Oops! Something went wrong, please try again later.
Results
I'm not really directly affected
18% - 1574 votes
I am taking a hit, but should be able to recover in the next year
23% - 2068 votes
My finances have been devastated
34% - 3086 votes
It's still too early to know what the full effect will be
25% - 2240 votes
Vote