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S.Africa rand dips in Asia, little impact from cabinet

Published 05/10/2009, 11:53 PM
Updated 05/10/2009, 11:56 PM

* South African rand falls vs dollar and yen

* Cross/yen position unwinding hits rand/yen

* Little reaction in Asia to formation of new cabinet

TOKYO, May 11 (Reuters) - The South African rand fell against the dollar and the yen on Monday, but market players said the drop was due to position unwinding rather than any negative reaction to the formation of South Africa's new cabinet.

Trevor Manuel was appointed to head a powerful new planning body on Sunday, keeping South Africa's former finance minister at the heart of policy-making in President Jacob Zuma's first cabinet.

A day after taking office, Zuma named tax authority chief Pravin Gordhan to replace Manuel in another sign of continuity as Africa's biggest economy heads towards its first recession in 17 years.

Market players said the rand fell as the yen rose broadly against higher-yielding currencies due to profit-taking.

"It seems like there is some position unwinding. It does not seem as if this is in reaction to any particular factor," said Junya Tanase, a foreign exchange strategist for JPMorgan Chase Bank in Tokyo.

"The moves are in line with the overall trend that is driven by investors' risk appetite, and the reaction to politics seems to be limited," Tanase said.

The South African rand fell against the yen and the dollar but hovered near seven-month peaks hit against both of those currencies last week, when the rand climbed due to improving investor confidence over the global economy.

The rand fell 0.5 percent against the yen to 11.8088 yen but was still near last week's high of 11.9795 yen, which was its highest since October.

The rand slipped against the dollar, with the U.S. currency rising 0.8 percent to 8.3350 rand. The dollar fell to 8.2502 rand last week, the highest level for the rand since October.

The formation of the new cabinet is unlikely to be negative for the rand, said a trader for a major Japanese bank.

"It means things are settling down," he said, adding that the rand was likely to be supported since market sentiment is now tilted in favour of emerging-market currencies.

"At the very least, it is not a reason to sell," the trader said. (Reporting by Masayuki Kitano; Editing by Chris Gallagher)

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