RAND RETREATS AS COMMODITIES DECLINE
The rand weakened for a second day, retreating from its key resistance level of 7.20 per dollar, as prices for South Africa's main export commodities fell.
Bloomberg News reported that the currency declined as much as 0.9 per cent to 7.3263 per dollar before trading 0.3 per cent down at 7.2864 as at 1.47pm in Johannesburg. The currency closed at 7.2632 on Monday after earlier trading as strong as 7.1995.
Gold, which rivals platinum as the country's biggest export, declined from a four-month high reached on Monday, losing as much as 1.3 per cent to $1,148.10 an ounce as a rebounding dollar and a pledge to provide Greece with loans curbed demand for the precious metal. Platinum snapped a two-day advance, falling as much as 1.8 per cent to $1,703.65 an ounce.
'The 7.20 level continues to prove a tough barrier to crack,' Judy Padayachee, a technical analyst at Barclays Plc-owned Absa Capital in Johannesburg, said. 'The rand has run quite hard and a lot of people are starting to take profits around 7.20.'
The rand has breached the 7.20 resistance level twice in the past five trading days, failing on each occasion to close stronger than that exchange rate. The currency last rose above 7.20 to the dollar in August 2008, a month before the collapse of Lehman Brothers Holdings Incorporated.
Government bonds fell in South Africa, raising the yield on the benchmark 13.5 per cent security due September 2015 by three basis points to 7.96 per cent. The bond's price fell by 14 cents to 123.97 rand.
The rand may slide almost three per cent by the end of this week to 7.45 per dollar as investors sell the currency to 'lock in profits' following its rally since the start of last month, according to Padayachee.