South African Rand Drops To 3-week Low Against Greenback

The South African rand weakened by more than 1.5 percent to reach a 3-week low of 6.8777 against the US dollar by 7:40 am ET Monday from its Asian session's high of 6.7690. If the rand declines further, 6.89 is seen as the next likely target level. The dollar-rand pair that finished last week's deals at 6.8050 is presently quoted at 6.8685.

The rand declined as the South African Reserve Bank bought dollars to prevent the currency's appreciation in December, the Central Bank said on its website today. Besides, the price of gold also declined and the South Africa is the second largest producers of Gold.

In economic news, South Africa's total vehicle sales continued to increase in December, boosted by strong growth in car sales, data from the National Association of Automobile Manufacturers of South Africa or NAAMSA showed today. Total vehicle sales increased 29.6% year-on-year to 39,504 in December from 30,470 vehicles sold in December 2009.