Loading...
See More

Rand races on Fed stimulus move

Sep 19 2013 09:57 Reuters

(File) (http://www.shutterstock.com)

Related Articles

Global shares up as Fed stays the course

US stocks surge as Fed keeps stimulus intact

Oil boils after Fed keeps policy unchanged

SA's households remain vulnerable

Rates seen on hold, despite inflation jump

SA motorists switch to smaller cars

 
Johannesburg - The rand traded near four-month highs against the dollar on Thursday, buoyed like other emerging market currencies by an unexpected US Federal Reserve decision to maintain its asset-buying programme at current levels.

Government bond yields slumped as much as 26 basis points from Wednesday's closing levels as the Fed move triggered renewed demand for local debt, which offers much higher returns for investors than those in developed markets.

The heavily traded 2026 benchmark fell to 7.895%, a level last seen in late July, while the shorter-dated 2015 paper shed 23 basis points to 5.83%.

By 08:30 the rand was at R9.5660/$, up 0.32% from Wednesday's close at R9.5970 in New York.

The rand soared more than 2% overnight, the most it has gained in a day since September 6, after the US central bank said it would continue injecting $85bn a month into the financial system through bond purchases, a key source of flows into high-yielding emerging markets.

"We are already seeing demand from importers at these levels but any retracements towards 9.62 should be met by offers," said Standard Bank trader Jan de Fouw.

However, a close above 9.6800 for dollar/rand should stall the greenback sell-off for now, he added.

The latest rand rally has whittled its year-to-date losses against the dollar to 13% from 19% a few weeks ago and should allay South African policymakers' concerns about rising imported price pressures.

Economists and traders expect the Reserve Bank to keep interest rates four-decade lows of 5.0% when it concludes its fifth policy meeting of the year on Thursday, in spite of inflation breaching the top of a 3% to 6% target band.

- REUTERS

Follow Fin24 on Twitter, Facebook, Google+ and Pinterest.

NEXT ON FIN24X

 
 
 

Read Fin24’s Comments Policy

24.com publishes all comments posted on articles provided that they adhere to our Comments Policy. Should you wish to report a comment for editorial review, please do so by clicking the 'Report Comment' button to the right of each comment.

Comment on this story
3 comments
Add your comment
Comment 0 characters remaining
 

Company Snapshot

We're talking about:

Money Clinic

Money Clinic
Do you have a question about your finances? We'll get an expert opinion.
Click here...
Loading...