RMB analysts said in their morning report that the partial shutdown of the US government‚ the first in 17 years‚ continued to cause uncertainty in global markets. US legislators failed to reach a funding agreement by Monday's deadline to keep the US government fully operational.
In morning trade the rand was bid at R10.1349 to the dollar compared with Tuesday's (1 October) close of R10.1078. Against the euro‚ the rand was bid at R13.7030 from its previous close of R13.6706 and was at R16.3878 against sterling from R16.3690 at its previous close.
The euro was bid at US$1.3518 from US$1.3524 overnight.
"The rand has finally succumbed to all the negatives but shows no sign of weakening significantly‚" RMB said.
The rand remained comfortably below the R10.17/$ resistance line and was looking to trade sideways in large range that extends down to 9.96/10.00‚ the RMB analysts said.
They said that while Monday's terrible trade numbers were ignored‚ Tuesday's poor local purchasing managers index (PMI) seemed to have contributed to the rand weakness.
Other factors they cited as weighing on the rand were a fairly negative International Monetary Fund (IMF) report on SA‚ which among other things‚ warned about the country's vulnerability to a slowdown in capital inflows.
Gold was also struggling‚ they said.
In terms of the US issue‚ RMB says the market thinking is that the shutdown will extend to the weekend at the very least.
The longer it continued‚ the greater the damage‚ and the market would start worrying‚ they said. "For now‚ the markets are taking it in stride. Some support has come from the view that the shutdown will delay Fed tapering further‚" they said.
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