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Rand firmer after Marcus speech

Johannesburg - The rand appreciated against the greenback on Thursday after Reserve Bank governor Gill Marcus downplayed a possible future interest rate cut‚ maintaining her stance on monetary policy.

There were significant upside risks to the inflation outlook both from the weaker rand and the possibility of high wage settlements‚ Marcus said on Thursday at a conference hosted by the Bureau for Economic Research.

While monetary policy remained “tolerant” of inflation at the upper end of the target range‚ the increasingly risky outlook for inflation limited the scope for further easing of monetary policy‚ she said.

At 11:55 the rand was bid at R9.9243/$ from Wednesday’s close of R9.9915/$. The local currency was bid at R13.0160/€ from its previous close of R13.0804/€ and was at R15.3339 against sterling from R15.3904 at its previous close.

The euro was bid at $1.3119 from $1.3092 at Wednesday’s close.

“The market’s recent moves have been overstretched and we have had excessive volatility‚” a local currency trader said. “Liquidity has been dire the whole week due to a lot of uncertainty in our market and global markets. The uncertainty is caused by the possibility that quantitative easing in the US may be cut‚ and this would have a negative affect on emerging market currencies such as the rand‚” he said.

“A lot of what Marcus said this morning she has stated before. There was nothing new in her speech. She did say the rand’s recent weakness is inflationary and that it is a concern. They think monetary policy is fine for now and Marcus is maintaining her stance‚” he said.


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