The rand was nearly 5c weaker against the dollar from its overnight close on Thursday morning, mainly due to a firmer dollar.
The greenback gained across a basket of international currencies as investors waited to hear what Federal Reserve chairwoman Janet Yellen would say about US monetary policy when she appeared before the Senate banking committee. However, her planned appearance before the committee on Thursday was postponed due to snow.
“If the message is perceived to be relatively more dovish compared with her remarks on Tuesday, the rand is likely to exhibit a weakening bias for the remainder of the week,” Absa Capital wrote in a morning note. Absa said more hawkish comments would likely lead to the rand strengthening.
On Tuesday Yellen noted her commitment to tapering and stimulus cuts, an outcome that was largely expected but was still reassuring as it indicated the bank would not yet raise interest rates, which were near zero, as the labour market recovery was not satisfactory. The rand firmed to R10.94 to the dollar in response as risk-on trade resumed, benefiting most emerging-market currencies.
Locally, the focus on Thursday will be on mining data due at 11.30am and the State of the Nation Address later in the evening.
“With elections due on May 7, and widespread and often violent protests over the delivery of social services, this speech is a critical test of the government’s ability to restore voter support prior to the polls,” Absa said.
At 8.50am, the rand was at R11.0615 to the dollar from Wednesday’s close of R10.9962.
Against the euro, the rand was at R15.0671 from its previous close of R14.9352 and was at R18.3634 against the pound from R18.2542 overnight.
The euro was at $1.3623 from $1.3636 on Wednesday.
Mining production for December is expected to decline moderately to -1% month on month from -2.9% in November as the timing of the festive-period holidays are expected to have weighed on output.