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Johannesburg - The rand remained weaker on Thursday morning amid sharp falls on global equity markets and a weaker euro ahead of the European Central Bank decision on interest rates later in the day.
The Bank of England and the European Central Bank will announce their rates decisions on Thursday afternoon - both are expected to cut rates, but the question is by how much.
At 12:10 the rand was bid at R9.8500 to the dollar from a previous close of R9.7950. It was bid at R12.7148 to the euro from a previous R12.6653 and at R15.7472 against sterling from R15.5650 before.
The euro was bid at $1.2898 from $1.2930 overnight, while gold was quoted at $740.05 a troy ounce from $738.50/oz overnight.
Global equities have turned sharply lower after the Dow slumped 5% on Wednesday. Asian markets are also off sharply, with the Nikkei closing down 6.5% and the Hang Seng off 7%. European markets have followed suit, with the FTSE100 last down 4.3%. The JSE's all share index was last off 1.5%.
RMB analysts said markets are once again turning their attention to the gloomy prospects for the global economy.
A turn for the worse
With almost all international bourses now in the red, it is clear that sentiment has taken a turn for the worse, which is likely to put the rand under pressure, RMB noted.
"It was a bit of a shock to us this morning to come in and see the rand where it is, because when we left last night it was looking quite perky," said a local currency trader.
He added that the ECB and BoE interest rates decisions will drive the market in the sort term.
"The rand keeps failing to break through the R9.60 level which suggests it's trying to get into ranges. However, if there is a surprise announcement on [European] rates this afternoon, then there's no reason that the rand can't move firmer," he added.
Dow Jones Newswires reports the euro fell against the dollar and the yen in Tokyo on Thursday, as speculation for bigger-than-expected interest rates cuts in Europe hurt the single currency, while tumbling Asian stocks fuelled demand for safe-haven currencies like the yen.
Traders say the euro could drop further if the European Central Bank or the Bank of England actually delivers larger-than-expected rate reductions at their policy meetings later in the global day.
Most market participants see the ECB cutting rates by half a percentage point to 3.25%. The BOE is also expected to reduce its rate by half a percentage point to 4.00%.
- I-Net Bridge