The rand, which showed little reaction to the improved current account, recovered from two-week lows against the dollar in technically driven trading on Wednesday, but the outlook remains shaky as it struggles to break through its weaker trading band.
At 3.55pm, the local unit was at R10.8976 to the dollar from Monday’s close of R10.8454.
The rand was at R15.1341 to the euro from its previous close of R15.0310 and was at R18.0889 to the pound from R18.0268 on Tuesday. The euro was at $1.3892 from $1.3856 previously.
Earlier in the day the local unit weakened to R10.96, but then recovered to levels around R10.89 against the dollar as it avoided renewed selling positions.
Standard Bank says in a technical research note the rand has since the beginning of February traded in a narrow band of between R11.22 and R10.60 against the dollar, thereby strengthening from its January low of R11.39.
According to Standard R10.9325, R11.01 and R11.1050 are the next important resistance levels as the rand has not been able to meaningfully break through R10.60. Standard recommends profits to be taken at R11.40 to the dollar with a stop loss position at R10.75, meaning it is not expected the rand will strengthen through this level soon.
The rand showed little reaction the more positive current account deficit data released by the Reserve Bank earlier which showed the deficit on the account narrowed much more than expected to 5.1% of gross domestic product (GDP) in the fourth quarter of 2013 from a revised 6.4% (previous 6.8%) in the third quarter.
A BDpro median consensus forecast from a survey conducted among 10 economists was for a current-account deficit of 5.5% of GDP. It was expected a better figure could support the rand, but analysts say the deficit is still among the highest in the world despite the improvement.