Cape Town - The rand weakened slightly in early trade on Tuesday morning, falling to R11.75 to the dollar after opening at R11.67/$.
Market analysts said the modest dip was largely expected and was caused by a correction from its highs last week, coupled with relative dollar strength.
The local currency is now trading 19 cents down on its intraweek high of R11.56 on Friday.
“Sentiment will drive the market once again today as there’s not much to note in terms of data. I’d expect further weakness as the dollar rebounds and caution reigns. We should trade between R11.65/$ and R11.80/$ [on Tuesday]” said Phillip Pearce, a dealer at TreasuryONE.
Bianca Botes, from corporate treasury management at Peregrine Treasury Solutions, said she expects the rand to trade in a band between R11.60 and R11.72/$.
She said while its slight weakening was expected, the local currency still appears robust.
“Relative to other emerging markets, South Africa currently has the benefit of a political environment where the positives outweigh the negatives, with President Cyril Ramaphosa leading the country in its journey to achieving economic and political stability,” she said.
NKR Research said it expects to the rand to hold in a band of between R11.60 and R11.85/$. The Budget Speech will be delivered on Wednesday afternoon.
FNB, in a pre-budget statement, said the relative strength of the rand may prompt Treasury to raise the fuel levy.
The local unit has strengthened by R2.72/$ since mid-November 2017, and is currently trading at its strongest levels since early 2015.