Rand holds steady‚ awaits Fed statement
Johannesburg – The rand held steady in afternoon trade on Wednesday‚ with all eyes on the US Federal Reserve.
At 15:48 the rand was bid at R8.2092 to the dollar from Tuesday’s close of R8.1944. It was bid at R10.4248 to the euro from its previous close of R10.3940 and at R12.9227 against sterling from R12.8817 before. The euro was bid at $1.2698 from Tuesday’s close of $1.2686.
“The market is pretty flat at the moment‚ waiting for some sort of stimulus package from Fed Chairman Ben Bernanke‚” said Mark Kalkwarf‚ senior portfolio manager at Iquad Group.
RMB analysts said in a note the obvious option for the Fed was to extend operation twist - sell short-dated and buy long-dated debt - and perhaps include mortgage bonds for the first time. This would mean little as they have less than US$200bn of short assets to sell‚ but it would signal that they are moving in a market-friendly direction.
“Another round of quantitative easing would be a much bigger deal but it looks like this will have to wait until at least the next meeting.
“A smaller bonus would be if they cut their economic growth forecasts and extend the promise of keeping rates at extraordinary low levels into 2015.
“There is talk that the eurozone is set to implement a banking union‚ while the bailout funds will be allowed to buy up bank debt directly. Both would be fundamental steps in resolving the crisis but would imply major concessions from Germany. Supposedly the concepts will be considered at next week’s EU summit.”