Johannesburg - The South African rand softened in
midday trade on Thursday, spooked by speculation that government had plans to
freeze the rand to ensure economic stability.
News reports on economy minister Ebrahim Patel's plans to freeze the rand,
were quickly quashed, according to a report by Bloomberg News, citing a
spokesperson for Ebrahim Patel, Minister of Economic Development.
At 11:40 the rand was bid at 7.51 to the dollar from 7.41 at its previous
close. It was bid at 11.2568 to the euro from its previous close of 11.1156 and
was at 12.4525 against sterling from 12.2928.
The euro was bid at $1.4956 from $1.5007 overnight.
A local trader said: "Talk about a rand freeze sparked a knee-jerk reaction
which saw the rand fall to 7.52 against the dollar, but back again to 7.46.
"At 7.45 we should break higher, and if the euro continues to weaken, we
could see a level of 7.65," the trader said.
"Unless something dramatic is announced, the rates decision should not have
an impact," he added.
RMB analysts John Cairns and Nema Ramkhelawan said in a morning report:
"Event risk abounds today. US employment and housing data is due later today
and should continue to support current market trends. Though important, it
appears that data releases have been sidelined in favour of corporate earnings
results, which continue to dominate the headlines and steer the performance of
US equity markets.
"Despite a slew of international data, our attention turns to SA today,
with Governor Mboweni set to deliver his last rate decision before bowing out
and handing over the reins to Gill Marcus. Despite the recent appreciation in
the rand and its consequent disinflationary effects, our economists expect the
SARB to keep the repo rate unchanged at 7%. US dollar/rand should trade
steadily ahead of the announcement but is unlikely to move significantly in
response to the decision since it is broadly expected to remain the same," the
analysts concluded.
Dow Jones Newswire reports that the dollar is higher in Europe on Thursday
as global equity markets tumble on fresh concerns over the world recovery.
The pound has also been hit by a suggestion from the Bank of England that
quantitative easing could be increased after all. Sterling had been helped
earlier this week by minutes of the last bank meeting, which failed to
entertain a further increase.
News from China that third-quarter gross domestic product growth amounted
to only 8.9% rather than the 9.1% that was expected appears to have undermined
some of the recent optimism over the global recovery.
Although GDP growth accelerated from 7.9% in the second quarter, the data
triggered an immediate sell off in equity markets.
Economic developments in Japan were also disappointing, with the latest
trade figures for September showing the country's trade surplus shrinking
rapidly as exports fell by 0.8% last month.
The euro was down at $1.4961 from $1.4998 as it continued to back away
after a brief rally over $1.50 Wednesday.
- I-Net Bridge